- Stainless steel production recovers in FY22
- Production rises on increasing consumption
- Mega-projects boost demand
- Output, consumption to increase in FY23
- Per capita consumption to increase
- Prices expected to correct in near term
Morning Brief: India’s finished stainless steel production in the last fiscal year (FY22) was recorded at 3.5 million tonnes (mnt), up 29% y-o-y compared to 2.71 mnt in FY21, data maintained with SteelMint shows.
Out of this, finished flats production accounted for 2.76 mnt (up 24% y-o-y) and the balance 732,000 tonnes were finished longs (up 30% y-o-y).
If we look at the past 4-year data, the country’s stainless steel production in FY19 touched a level of 5.10 mnt. However, in the following two years (FY20 and FY21), production volumes dropped to 3 mnt and 2.71 mnt respectively, mainly hit by the Covid-19 waves. In FY22, production again picked up supported by demand recovery.
Factors behind the rise in production –
- Ease in Covid situation: Stainless steel production was severely hit because of the Covid-19 pandemic. Production volumes dropped significantly in the last two years to below 3 mnt. However, with the easing Covid situation in FY22, production picked up as mills gradually ramped up their output.
- Rising demand: Stainless steel demand saw a noticeable growth in the past year supported by government-stimulated infrastructure projects like Bharatmala, Sagarmala, inland waterways, dry/land ports, and UDAN and also projects that were undertaken to give a boost to the post-Covid economy.
- Increased usage in govt projects: The government is stressing on increasing consumption of stainless steel through its mega-infrastructure projects considering its sustainability and corrosion-resistant properties. Its usage is thus ideal in projects along the nation’s 7,500-km long coastal line, which is prone to corrosion due to environmental factors.
Consumption increases in FY22
India’s domestic consumption of stainless steel in the last fiscal was recorded at 3.08 mnt, higher by 30.5% compared to 2.36 mnt of the previous fiscal.
The per capita consumption of stainless steel in India is 2.6 kg at present, according to latest data. This is likely to increase further in the coming years backed by several mega-infrastructure projects.
Why stainless steel is being preferred over ordinary steel?
Interestingly, stainless steel consumption in the country has seen a consistent growth due to its increasing demand in the infrastructure segment.
The government-funded mega projects are largely preferring stainless steel over ordinary steel due to its various unique properties:
- Corrosion resistance and durability: The combination of corrosion resistance and durability increases product lifetime.
- Low maintenance: Stainless steel requires only minimal maintenance, which is not only economical but also good for the environment.
- Recyclability: About 90% of all stainless steel products are recyclable.
- Low life-cycle cost: Cost savings can be in the range of 30-40% compared to alternative materials, and they arise from reduced repair and maintenance costs.
India’s stainless steel capacity
The country’s total stainless steel production capacity, including flats and longs, stands at around 6.5 mnt, out of which the share of flat products is 5 mnt.
Price trends
Stainless steel prices in India saw a rising trend in the past fiscal following the trend of nickel futures on the London Metal Exchange (LME).
As per latest SteelMint assessment, stainless steel 304 grade CRC prices were recorded at INR 299,000/kg on 26 April. These corrected to INR 288,000/kg as on 10 May.
This downward trend is expected to continue in the near term.
Short-term outlook
Stainless steel production is expected to increase further in FY23 backed by the infra push.
Demand for stainless steel in India has slowed down in the past few months due to inflation. However, it is expected to revive in the next 1-2 months.
Leave a Reply