Monday, June 27,
Demand-supply situation in India
The domestic steel industry is set to add around 30 million tonnes (MT) capacity over the next 18 months, making the country self-reliant and putting it in net exporters’ league, says an IDFC Securities survey.
In 2010, steel consumption in India grew by 9.6 per cent. In 2011, steel use is forecasted to grow by 13.3%. While in 2012, the growth rate is forecasted to accelerate further to 14.3%. Growing steel consumption indicates healthy economic growth for India.
The projected investment in infrastructure creation during the 11th Plan is $ 514 billion. And around 125 mt of steel will be needed to achieve the targeted investment. Even if 75 per cent of these investments materialise, around 100 mt of steel would still be needed on an incremental basis for the creation of infrastructure. Hence, the potential for high steel consumption remains. There could be demand-supply mismatch in the short run; however, in the medium- to long-term, the prospects of the Indian steel industry are very good.
Based on these parameters and the large potential for consumption in the rural sector, it is expected that demand for steel will continue to grow in traditional sectors as well.
Steel price trend
In recent months, steel prices have moderated and are expected to be stable in the near future. Most of the major steel companies have maintained the same prices as seen in the month of May.
However, going forward, pricing will depend upon the demand-supply equilibrium but prices are expected to move in a narrow band as compared to the previous year due to volatility in the pricing of raw material and its uncertain supply situation.
Major challenges faced by Steel Industry & upcoming technologies
To secure their raw material supply especially coking coal, steel giants like SAIL are looking at acquisition of coking coal mines abroad. International Coal Ventures Ltd, of which SAIL is a member, is in the process of discussions with asset owners in Australia, USA, Indonesia, Mozambique, Mongolia, etc., for this purpose.
Steel companies are also looking forward to adopt alternative and greener technologies to reduce their dependence on coking coal & iron ore lumps. SAIL is installing pulverised coal injection (PCI) technology, which uses non-coking coal, in all its blast furnaces. Companies like POSCO & SAIL are also using FINEX and other smelting and direct reduction technologies that use iron ore fines to make steel.
But in spite of the coming up of latest technologies, there are still some major challenges that the Indian steel industry is facing today. Issues related to land acquisition, pursuing of environmental clearances for mining activities have put many mega projects on hold. However, the recent clearances given to POSCO has brought some hope of quicker implementation of these projects and all these collaborations are expected to add additional steelmaking capacity in India which are less resource-intensive.
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