Things have started looking up for the Indian steel industry. According to the Ministry of Steel, India has emerged as the fifth-largest producer of steel in the world.
At present production rates, India will soon emerge as the second-largest producer of crude steel by 2015, according to igovernment,in, an interactive web platform for governance issues.
The Indian steel consumption grew about 8% in the financial year ending March 2010. One of the key factors for this growth has been the growth of the automobile industry.
At present, India produces about 60 million tonnes of steel, and the overall consumption rate stands at about the same figure.
With the growth of the economy, sectors such as infrastructure are seeing a spurt in growth and demand. Stainless steel sector is likely to record strong growth in the next two years, as various transportation and infrastructure projects boost demand, the report said.
Although an economic slowdown in the domestic and global credit market could impact some private-sector projects, large government projects in transportation, such as stainless steel railway carriages, will take a larger market share.
In January this year, the Indian Stainless Development Organisation (ISDO) forecast that the world's stainless steel demand would rise by about 4.2% each year between 2010 and 2015, with India and China leading the upward trend.
The forecast by ISDO appears to be backed by the latest provisional statistics issued by the Belgium-based International Stainless Steel Forum (ISSF).
According to the ISSF, production of stainless steel and heat-resisting steel has risen 44.3% in the first half of 2010, compared with the same period last year, which had a total production of 15.6 million tonnes.
As expected, China continues to lead the production table with 5.47 million tonnes produced during the first half of 2010, an increase of 35% year- over-year, but the increase in the production rate was lower than the average recorded by other regions.
The remainder of Asia, excluding China, recorded production volumes of 4.31 million tonnes, an increase of 46% year-over-year, while the Western Europe/Africa region was slightly behind at 4.3 million tonnes, an increase of 49% year-over-year.
The Americas, the only region to record a slightly lower production output in the second quarter of the year compared to the first quarter, recorded a production level of 1.4 million tonnes for the first half of the year, and a year-over-year increase of 68%.
This was the highest production increase of any single region. The second-highest production increase was Eastern Europe at 63%, but total production level for the region was less than 200,000 tonnes.
According to the ISSF, the record levels in production can be explained by several factors. The production levels in the first half of 2009 decreased significantly because of the global recession, but the global economy has recovered much faster than anticipated. In addition, there has been a significant rise in the restocking of inventory levels.
The steel industry and the automobile sector are inextricably related. The main steel types that are used in the automobile industry are carbon steel and special steel, such as flats and longs. This is inclusive of forged parts.
Between flats and longs, flats find larger use in the form of cold-rolled steel sheets. Their primary applications are for outer body and inner component construction. While a huge amount of steel is imported, India at present also manufactures and supplies locally.
Tata Steel and Bhushan Steel have developed capacities to manufacture cold-rolled steel. JSW Steel has recently joined forces with Nippon Steel Corporation to develop cold-rolled steel as well.
The Indian automobile industry also recorded robust growth in the past fiscal year as an immediate after- effect of the rolling back of the recession.
Statistics from the automobile industry show that the production for April-June 2010 was up 32.6% year-over-year. The industry produced 5.57 million vehicles during this period.
Passenger vehicle sales reports indicate this segment increased 33.78% between April and July, whereas utility vehicles sales increased 23.87%. Multi-purpose vehicles increased 43.96%.
Tata Steel launched the world's first branded cold-rolled product, called Steelium. In its annual report, Tata Steel announced that sales growth for the 2009-10 fiscal had increased 18% to 6.17 million tonnes. Flat product sales figures for the same period stood at 3.47 million tonnes, compared to 3.23 million tons last year.
Nippon Steel has proposed investing about US$388 million with Tata Steel to make auto-grade steel in India by March 2013.
The resurgence of the global automotive sector has led to an increased demand for ferrite steels, while the global market for nickel-chrome steels has decreased in comparison. An increased demand in the Chinese domestic market has also led to a growth in chrome-manganese steels.
An area of concern for the Indian automobile industry is the rising imports of steel from China. Between May and June this year, China exported approximately 1 million tonnes of structural-grade steel into India.
The quality of the steel is said to be low, but its cost is 15-16 % cheaper than the local product. The basic price of IS 2062 Grade-B steel in India is about US$755 per tonne, exclusive of excise and freight rates. In comparison, Chinese structural steel is available for about US$711, all-inclusive.
The Indian steel industry is also worried about a loophole in the China export rebate policy. Experts feel that Boron steel does not carry an export rebate, and there is concern that China will ship boron steel under the title of structural steel.
Boron steel is largely used in cars as it is a durable and lightweight material. With the demand in the auto industry already climbing about 22 % higher than last year, less expensive steel imports could lead to a setback for the domestic steel market.
Despite the relatively high position on the production ladder, consumption of stainless steel in India on a per capita basis is the lowest in the world, at just 1.2 kilograms.
The world's highest per capita consumer is Italy, which uses approximately 30 kilograms of stainless steel per person each year. The global average per-person consumption is 9.4 kilograms. -- Source: igovernment.in