DELHI – Steel consumption in India is forecast to grow at record rates in accordance with Indian Prime Minister Narendra Modi’s “Make in India” campaign. Indian steel buyers have caused consumption to grow at its fastest pace in 5 years, and this trend is expected to continue with Indian raw-alloys growing scarce.
The Indian government, while a strong exporter of iron ore, has an insatiable appetite for steel. India’s steel imports from China alone doubled in April-September. The “Make in India” campaign seeks to transform India into an exporting hub and the inflow of steel from China will be used to revitalize its wavering manufacturing capacity.
With crude stainless steel production at 3 million tonnes, India ranks as the third largest producer of stainless steel. Low per-capita steel consumption of 2.1 kg compared to the world average of 5 kgs show that there is potential for long-term growth, but sluggish progress in infrastructure and a growing demand for steel across numerous sectors have proven to be major obstacles.
India’s steel industry is currently only running at 80 percent of capacity. Nevertheless, the World Steel Association (WSA) expects Narendra Modi’s pro-business plans to spur weakening Indian steel demand.
In fact, WSA predicts India will meet a demand of 76.2 million tons of steel by the end of this year. Additionally, there are expectations that the “Make in India” campaign will implement structural reforms designed to increase business confidence, which would result in a further six percent growth by 2015.
However, since a large majority of Indian steel imports stem from Chinese companies, Indian steelmakers such as JSW, Tata Steel, Jindal Steel and Power Ltd are likely to be priced out by their Chinese competitors. While formulating ways to remain competitive, a steel ministry spokesman said he had no immediate comment on whether authorities would consider raising tariffs.
A.S. Firoz, chief economist at a Steel Ministry unit, told Reuters: “The global market is such that the only thing that you can do is take some protective action to save the (Indian) industry. Otherwise you can’t decide what the global prices will be or at what price China will export steel.”
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