Steel market condition in India
Steel is vital for the growth of any economy and it is also considered one of the reasons behind human civilisation. The steel industry worldwide owes a huge debt to the founder of the Bessemer process, the process used for mass production of steel from molten pig iron. It was an inexpensive process and the only way to produce steel until the early 1990s. With the passage of time and technical advances came many other processes to produce steel.
There has been a notable developement in the production of steel in India over the years. From a mere one million ton capacity and with three steel plants and a very few arc furnaces at the time of Independence, India has now grown to become the fourth largest crude steel producer globally and ranks first as far as the production of sponge iron is concerned. Steel contributes to nearly two percent of India’s GDP and is expected to rise in the future. Steel production has increased at a CAGR (Compound Annual Growth Rate) of 6.9%. According to JPC (Joint Plant Committee), Ministry of steel the consumption of total finished steel went up by 0.6% from April’13-April’14 to 73.93 Metric Ton.
Consumption patterns of different sectors
India’s per capita steel consumption was 57.8 kilograms in 2013 and is expected to go up with the development in the industrial sector. Infrastructure, automobile and real estate continue to show a continued increase in the demand for steel products like stainless steel pipes, tubes etc. Hence putting India on the world map. The construction sector in India accounts for 60% of the steel consumption whereas 15% is consumed by the automobile industry.
There has been few notable investments for the development of the steel industry in the past. Steel Authority of India Ltd (SAIL) has secured contracts for supplying over 117,000 tonnes of rails after bids for two global tenders floated by Rail Vikas Nigam Ltd (RVNL), for major upcoming passenger rail line projects in India. Ministry of Steel, Government of India is making efforts to set up a strong centre for the research and developement (R&D) in the steel sector. As per Tata Steel the sector is about to witness an investment of Rs. 2 Trillion in the coming years.
With the increasing demand the improving globalisation the demand for steel products is only going to rise in the future. Emerging countries will contribute to be the majority as these countries require a good amout of steel for urbanisation and industrial processes.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.