India has emerged to be a savior of the flagging steel demand at the global level amidst China’s enormous construction sector in a funk and US and the Europe likely heading towards a recession. India is currently experiencing a building boom and is on track to exceed China as the world’s most populous nation by the end of this year.
Prime Minister of India, Narendra Modi is striving to modernize roads, railway networks, and ports in an attempt to vie with China as a manufacturing hub. That is set to translate into a jump of 6.7 percent jump in the demand for steel to around 120 million tons in the year 2023, as estimated by the World Steel Association which would be the highest growth among major economies. India saw a similar expansion this year, overtaking the US and becoming the world’s no.2 steel consumer after China a couple of years ago.
The deputy managing director at JSW Steel Limited, Jayant Archarya, said that the nation-building phase of any economy has the requirement of a lot of steel and commodities. He further said that India is going through this period in this decade and it has built the capacity to boost the steel consumption of the country to over 200 million tons by 2030. A joint venture between India’s Mittal family and the Japanese, ArcelorMittal Nippon Steel India Limited has plans to more than triple capacity to 30 million tons in the coming decades. Posco Holdings Inc. a South Korean Steel Maker and Indian Tycoon Gautam Adani, who is Asia’s richest person are exploring setting up mills in the nation.
A vast majority of steel India uses is produced by the country, but is also being forced to import more to meet the rising surge in the demand. Inward shipments rose 15 percent from April through October from a year earlier to 3.1 million tons, based on government figures.
Despite the strong growth, India is lacking behind its counterparts of Asian powerhouse in terms of total steel consumption. How fast India can bridge the gap will be depended on Modi’s construction roll-out with the ministry of finance which is estimated to be $1.4 trillion in funding that will be required for the National Infrastructure Pipeline through 2025.
The real-estate problem in China and the lingering impact of COVID-19 will keep the demand for steel suppressed next year as said by Jayanta Roy who is the senior vice president at ICRA Ltd, the Indian Unit of Moody’s Investors Service. He further added that over the long term, it would depend on the recovery of the property sector on the one hand, and the policy of the government of an infrastructure-led economic growth model in India.
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