India has recorded positive growth in steel production despite the prevailing global slowdown, which has affected even China, the largest steel producing country.
According to latest World Steel Association (worldsteel) figures, India’s crude steel production was 89.6 MT, up by 2.6% compared to 2014. In China, the crude steel production reached 803.6 MT in 2015, which is down by 2.3% compared to 2014. All over the world, crude steel production reached 1622.8 million tonne (MT) in 2015, which is down by 2.8% compared to 2014. India’s global share also increased marginally — from 5.2% in 2014 to 5.5%. Experts attribute this development to reform momentum and policies favouring infrastructure and manufacturing output. The expansion SAIL and Tata Steel also added to the positive growth. As per the figures, India not only increased its production but also improved its ranking. In 2014, India’s rank was fourth. It became third in 2015, replacing USA. The top 10 steel producing countries, as per the ranking, are China, Japan, India, USA, Russia, South Korea, Germany, Brazil, Turkey, Ukraine (see chart). Interestingly, except India, all the top 10 countries reported negative growth in the steel production.
Worldsteel, in its short range outlook for 2016-17, has said that the prospects of steel sector in India are bright. It said: “India’s prospects are brightening due to low oil prices, the reform momentum and policies to increase infrastructure and manufacturing output. India’s steel demand will increase by 5.5% in both 2016 and 2017.” Notably, Steel Authority of India Limited (SAIL) will complete its expansion programme this year while Tata Steel is likely to commission its 6 MTPA Kalinganagar project.
A senior steel company official said the global steel industry is going through a severe downturn. “The demand slowdown has led to prices going down. Many steel producing countries have adopted a pricing strategy and exporting at prices which are lower than its cost of production,” he said.
The positive growth, sources said, was a result of several measures taken by the government in the last few months. These measures were taken to support the domestic industries to withstand the pressure and tide over the global crisis. For reducing the stress in the steel sector, Reserve Bank of India has extended a scheme whereby longer amortisation period for loans to projects in infrastructure and core industries sector, has been allowed. The government also increased the peak rate of basic customs duty on flat and non-flat steel from 10 to 15%. It has also levied anti-dumping duty for five years on imports of certain variety of steel from China, Korea and Malaysia.
The government is also considering a comprehension package to support the sector. While replying to a question in the Rajya Sabha this week, Minister of State for Steel, Vishnu Deo Sai said: “Though the government was not preparing any bailout package for the steel sector, representations received from Indian Chambers of Commerce and Indian Steel Association to consider working out a suitable comprehension package to support steel industry, have been sent to the Department of Financial Services.” A steel expert said that though India’s performance is better, it is a matter of concern that our steel plants could not utilise the full installed capacity. “Indian steel plants have the installed capacity of 120 MT. We would have done much better. But given the global situation, India’s performance is satisfactory,” he said.