Summer 2012 Steel Outlook for India

Having opened the summer season in the US, this Memorial Day may represent new hopes for business promotion in the US as well as for the Indian metal industry to recover over the next few months.

The summer outlook for four main industrial metals (steel, aluminum, copper, and stainless/nickel) over the next three months seems to remain volatile in India. The steel industry in India is trying to recover from the recent downtrend in business.

Market analysts believe that the Indian steel sector will grow during the next three months. Credit and rating agencies also see steel sectors in developing countries as likely to grow in the current year.

According to Ernst & Young, in 2012, the steel sectors in India, Russia, Brazil and South Korea, will continue to grow.

However, E&Y says that in India, demand for steel from the domestic sector is creating a positive outlook as India is expected to perform better.

The World Steel Association (WSA) has also projected that global apparent steel use will increase by 5.4 percent in 2012. According to the WSA, for India, growth in apparent steel use is expected to go up by 7.9 percent in 2012.

The Indian federal government and steel mills are trying to enhance steel production. Indian steel companies are ramping up their capacity through both Greenfield and Brownfield projects.

Currently India is the fourth-largest producer of crude steel in the world, with crude steelmaking capacity of 84 million tons, and it is expected to become the second-largest producer of crude steel by 2015. It is expected that India’s steel capacity could exceed 200 million tons by 2020.

India’s government has signed 222 memorandums of understanding for an additional 276 million tons per year of capacity by 2019-20. It took various fiscal and other measures for stabilizing steel prices like significant reduction in import duties on steel.

The government has also imposed an export duty of 30 percent on iron ore fines and lumps in order to discourage iron ore export and conserve the commodity for the long-term requirements of the domestic steel industry.

Until recently, the domestic steel industry was under pressure due to shortages of iron ore because of a ban on illegal mining in the south Indian state of Karnataka. But last month, the Supreme Court of India partially lifted the ban that will help the Indian steel companies enhance production.


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