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India Could Become World’s Second-Largest Steel Producer

By MetalMiner CommoditiesJan 09, 2015 05:30AM ET
www.investing.com/analysis/india-could-become-world%EF%BF%BD%EF%BF%BD%EF%BF%BDs-second-largest-steel-producer-237924
India Could Become World’s Second-Largest Steel Producer
By MetalMiner   |  Jan 09, 2015 05:30AM ET
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India is hoping the New Year brings some cheer to its steel sector. Several analysts, including Frost & Sullivan, are predicting that India will become the world’s second-largest producer of crude steel in 2015-16, moving up from its current fourth position

This is based on its capacity increase projection of 112.5 million tons from the present 100 million tons. All indicators suggest that India will move up, both in production and consumption, according to a sectoral analysis by Frost & Sullivan’s Metals & Mining Practice.

The primary hope that fuels this conviction is the Make In India campaign launched a few months ago by Indian Prime Minister Narendra Modi. The other is the expected re-opening of iron ore mines in the provinces of Goa and Karnataka in the first quarter of the year, which could then provide the much-needed raw material for steel making.

The Frost & Sullivan report said with infrastructure development and the automotive industry driving steel demand, production is expected to hit 140 million tons by the end of 2016, while consumption is expected to grow 6.8% to reach 104 million tons by 2017.

Some of the other predictions that could propel India to the No: 2 position:

· 6% growth of the Indian economy, thus leading to revival in domestic demand

· The government’s incentives for economic growth by adding funds in construction, infrastructure, automotive and power sectors

· Capacity addition with almost all the major steel producers in the process of setting up brownfield and greenfield plants

Where capacity addition is concerned, the state-run Steel Authority of India Ltd. (NSE:SAIL) is clearly ahead of the others. It plans to add 27 million tons comprising 21.4 million tons of brownfield and 5.6 million tons of greenfield capacities. JSW Steel Limited (NSE:JSTL) is planning to add 12 million tons of brownfield capacity, while JSW ISPAT Steel (NSE:JSWI) and Essar Steel plan to add another 4.5 million tons and 10 million tons of brownfield capacity, respectively.

India’s steel production, and to some degree, its consumption, started showing signs of recovery toward the end of 2014. In November, last year, for example, it grew at 4.8%, outpacing the world average of 0.1% growth.

Domestic production touched 76.19 million tons between January and November 2014. India managed to retain its position as the world’s fourth-largest steelmaker, according to the Brussels-based World Steel Association (WSA). China, Japan and the US were ahead of it last year, but India’s production growth of 2.4% over 2013, surpassed the global average growth of 1.8%.

India will now look to pass both China and the US this year to reach its coveted position, something which steel analysts here agree is entirely possible despite the aggressive Chinese steel imports into India of late.

by Jeff Yoders

India Could Become World’s Second-Largest Steel Producer
 

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India Could Become World’s Second-Largest Steel Producer

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