India: Flat Steel Capacity Expansion on the anvil; Tata to add 3 MnT by Q4 FY15

Tata Steel’s Kalinganagar project is going to commence operation from fourth quarter of FY15, confirmed industry sources. The Kalinganagar project will add 3 MnT pa flat capacities to Tata Steels’ portfolio. The company’s new flat steel capacity expansion will help it to cater to the growing needs of the automobile sector.

Flat Steel Industry is seeing rise in its capacity as many manufacturers of flat products in India have planned for expansion in the near future. As per market reports, JSW Steel is also mulling for hike in its production capacity by 1.7MnT for its Dolvi plant, taking its capacity to 5 MnT. JSW currently manufactures HR Coils in its Dolvi plant. Similarly, other major producer SAIL has also announced to add capacity of 1.2 MnT pa for CR products in Rourkela Steel Plant.  The combined capacity of all players in the HR Coil sector stood at 35.6 MnT in FY14, whereas it is expected to touch around 41.6 MnT in FY15. A comparison of HR Coil capacity of different manufacturers is as shown under.

*Expected Capacity in FY’15

Many industry players are quite optimistic for the growth of domestic flat steel industry and this has led to announcement of significant expansion of capacity of late. On the other hand, contrarians believe that the additional capacity is not going to be absorbed in the domestic market soon due to lack of demand in the market and this will encourage manufacturers to export these surplus quantities to the global markets. A Mumbai based industry analyst said, “Raw material availability and geographical advantage make India quite competitive hotspot for manufacturing of finished steel products. Current increase in capacity will cater to the export market in future.”

Industry veterans believe, India is going to be one of the largest manufacturing hubs for automobiles in Asia and this will bring huge demand for flat products in the near future. Chennai which has recently planned to set up an Auto City is expected to see a good growth in demand for flat steel products in near term. Tamil Nadu accounts for around 30-35 per cent of India’s auto component production worth $6.2 billion. Upcoming additional capacities in India can feed the needs of this industry in future.