Riding on strong demand outlook, the steel industry is likely to witness close to 20 million tonne capacity addition, mostly through brownfield expansion, over the next four-to-five years. According to Mr Jayanta Roy, senior vice-president, corporate sector rating, ICRA, a majority of the expected capacity addition in the next three-four years would be by way of brownfield projects. Mr Roy told BusinessLine said that “Land acquisition is a problem area in the case of greenfield projects. Most of the ongoing steel projects are brownfield expansions in nature.”
He added “Moreover, companies would also try to ramp up production from assets acquired through the resolution process under Insolvency and Bankruptcy Code at the earliest so as to capitalise on the improved demand for steel both in domestic and international markets and firm prices. IBC proceedings have opened the scope for consolidation in the steel sector which may lead to better economies of scale, synergies in raw material procurement and better pricing power for manufacturers.”
The country’s installed capacity at present is close to 133 million tonne, and the production stood around 104-105 million tonne compared to a domestic demand of 94-95 million tonne in 2017-18.
Source : BUSINESS LINE
Yaang Pipe Industry Co., Limited (www.yaang.com)