The year 2017 ended with slower manufacturing and industrial growth till October, a subdued GDP of two quarters, poor agricultural production and GST related complexities. Likewise, the New Year began with a little apprehension and uncertainty regarding the outlook for business in the months to come.
The Indian steel industry has kept growing despite the ups and downs experienced by the other industries during the previous year. With the availability of the material being taken care of by rising level of production and increasing share of value added items, it was fast becoming the most preferred material for the architects and the designers as a flexible, ductile, earth quake resistant, fire resistant, recyclable and sustainable item for choice that leads to faster construction, elegant structures, easy to maintain and relocate, if need be.
Buoyed by the favorable global market, the current steel scenario in India can best be described as most apt for taking forward the planned expansion in capacity to cater to the emerging market, both domestic and exports. According to industry analysts, Indian steel manufacturers are up for great gain as the world looks up to India to fulfill the 300 MT capacities in crude steel production by 2030.
Growth in steel consumption in Q1 of FY18 at 4.6 % has reached 6.8% in January ’18. Production of crude steel at 4.2% growth in April-January ’18 reached 84.4 MT. India is likely to end FY18 with finished steel consumption at 90 MT (growth of around 7.0% over FY17) and CS production of 102MT. The short range outlook by World steel Association has projected India’s finished steel consumption at 92.1 MT in 2018 (5.7% growth).
The growth in Global steel consumption, on the contrary, was estimated to be 1648.1 MT at 1.6% growth in 2018. The finished steel exports from India, likely to be around 11.0 MT by March ’18, are expected to experience a growth of around 34% over the previous year.
A major contributing factor to the speculated rise of Indian steel industry is the prices of HRC exported by China. The prices were at $369/t (SS 400 grade ex-Tianjin) in October ’16 are currently available at $585/t in February ’18 (10th February ’18), a rise of 59% over a period of 16 months.
On the other hand, the prices of Turkish export for rebar at $370/T in October ’16 is currently available at $558/T in February ’18 (February 10, 2018), a rise of 51% during the period. Contrary to this, the domestic price of HRC ex-Mumbai (all inclusive) that was 33625/T in October 2016 is presently ruling at 46,020/T (all inclusive), a growth of 37% during the period.
This is a favorable scenario for industrial growth, especially for the growth of steel consumption that has been facilitated by the allocation of Rs 5.97 lakh crore in the Budget for FY19 for the infrastructure sector which is a 21% rise over last year.
This amount has been allocated among various departments like, coal, petroleum, power, steel, new and renewable energy, civil aviation, defense, railways, atomic energy, road transport and highways, shipping, housing and urban affairs, telecommunication, higher education for capital expenditures, we may assume that in all these areas, the actual implementation has the higher elements of steel based construction.
Upon taking all these influencing factors under consideration, it can safely be assumed that there would be at least 25% incremental demand at around 6.6 MT in the FY2018-19.
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