(Hanoi Iron and Steel – HSV) With China's large-scale construction sector still struggling and the US and Europe likely to fall into recession, the country has emerged as a savior for global steel demand.
Poised to overtake China as the world's most populous country next year, India is in the midst of a construction boom. Indian Prime Minister Narendra Modi is seeking to modernize roads, rail networks and ports to compete with China as a manufacturing hub.
According to the World Steel Association, India's steel demand will increase by 6.7% to about 120 million tons in 2023, the highest growth among major economies. India is a country that has seen strong expansion this year, having overtaken the US to become the world's No. 2 steel consumer after China a few years ago.
Mr. Jayant Acharya, Deputy CEO of JSW Steel - India's largest steel producer said: "The nation-building phase of any economy requires a lot of steel and goods." India is going through that phase this decade and could boost its steel consumption to more than 200 million tonnes by 2030, he said.
This bright outlook has generated a flurry of activity in the industry. ArcelorMittal Nippon Steel India – a joint venture between India's Mittal family and the Japanese producer plans to triple current capacity to 30 million tons over the next decade. Korean steelmaker Posco Holdings and Indian tycoon Gautam Adani, Asia's richest man, are also looking to set up factories in the country.
India produces most of the steel it uses, but it is also forced to import more to meet rising demand. According to government data, import shipments increased 15% from April to October compared to the same period last year to 3.1 million tons.
Local manufacturers are becoming worried about a wave of cheap imports as demand at traditional steelmakers dries up. China accounted for more than a quarter of India's October imports while some Russian steel is also being sent here.
Steel demand in India is forecast to increase sharply from next year. Graphics: Bloomberg
Mr. A.K. Hazra, Deputy General Secretary of the Indian Steel Association, has asked the authorities to look into the matter. “We demand that imports must be priced competitively and internationally, and that quality must comply with Indian standards.”
Despite strong growth, India is still far behind its Asian powerhouse rival in terms of total steel consumption. According to data from the World Steel Association, India's demand next year is still less than China's 914 million tons.
How quickly India can close the gap will depend on the success of Prime Minister Modi's construction rollout, with the Treasury estimating $1.4 trillion in National Infrastructure Pipeline funding will be needed through 2025.
Mr. Jayanta Roy, Senior Vice President of Indian Credit Rating Agency ICRA, said China's real estate problems and the lingering impact of the Covid-19 epidemic will still reduce the country's steel demand next year.
Theo Bloomberg