TC Malhotra contributes to MetalMiner from New Delhi.
Steel, being a product of a large and technologically complex industry, is crucial to the development of any modern economy and Indian steelmakers see higher potential because the current global steel industry is in its best position compared to the last few decades.
With rising economy trends and liberal policies during the last decade, India has gained an important position on the global steel map due to its giant steel mills, and continuous modernization and upgrades of old plants.
The World Steel Association ranked India as the fourth-largest producer of steel in 2010. India is also the world’s fourth-largest producer of iron ore. Currently, India has about 25 billion tons of iron ore reserves.
Crude steel production in September 2011 for the 64 countries reporting to the World Steel Association was 123.6 million tons, a year-on-year increase of 9.7 percent.
According to the latest data from the WSA, India’s monthly steel production increased by 5.2 percent, while the year-to-date total was up 5.3 percent to 54 million tons. However, Indian finished steel consumption rose 11.3 percent to 64.5 million tons.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has said that in the past decade, the steel consumption rose at a compound annual growth rate of 9.4 percent against the GDP growth of 7.7 percent; but high levels of growth in construction, housing, automobiles and agriculture point toward steel demand exceeding 12 percent in the near future.
Given the growth of the domestic steel sector, India is likely to overtake the US to become the third-largest steel producer in the world in the next couple of years.
Reportedly, Ronald E. Ashburn, executive director of the Association for Iron and Steel Technology (AIST) told a press conference in Jamshedpur that India will eclipse the US in producing steel two to three years from now, ultimately placing them behind China and Japan. While speaking on the eve of launching the AIST International Steel Academy, Ashburn said India could secure the second spot by 2015-16 if it achieves the targeted 145-150 million tons of added capacity by then.
Currently, India produces about 70 million tons per year. In 2012, India’s steel demand will touch 14.3 percent, reaching 79 million tons per year, according to WSA data.
As the demand expectations for steel products in the coming years are rapidly growing, Indian steel producers are trying to expand their production capacity.
Reports suggest that JSW Steel Ltd. plans to establish a coke oven plant with a capacity of 1 million tons per year and a pellet plant with capacity of 4 million tons/year at JSW Ispat Steel (JISL) Ltd.’s Dolvi steel complex in Maharashtra state.
JSW Steel has also proposed establishing an 800,000-ton-per-year cold-rolling facility at the Dolvi steel complex. The project is expected to cost around Rs 3 billion ($60 million) and is likely to be commissioned within 18 months.
Meanwhile, Essar Steel and SAIL are also expanding…more on this in Part Two.