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19 March 2008 at 16:10 IST
India's rush to become the global Steel leader
Commodity OnlineBANGALORE: As rapid construction activities are transforming and changing the faces of all Indian cities, there is one commodity that is hot these days: Steel.
India's rapid economic growth is being built on a frame of steel. Soaring demand by sectors like infrastructure, real estate and automobiles, at home and abroad, has put India's steel industry on the world steel map.
The rapid rise in the production has resulted in India becoming the fifth largest producer of steel in the world, up by two places, on the back of 50.71 million tonnes (mt) production of crude steel and 51.9 mt of finished steel. The production of finished steel grew by 16.52 per cent, from 44.54 mt in 2005-06 to 49.39 mt in 2006-07.
In the first half of the current fiscal year (April-September), production of finished carbon steel is estimated at 24.8 mt as against 23.25 mt during the corresponding year previous year, recording a growth rate of 6.6 per cent. During the same period, pig iron recorded a growth of 7.9 per cent to touch 2.58 mt.
It is estimated that by 2015-16, India would become the second largest steel producer globally with an annual production of 137 mt.
Along with growth in production, exports have increased by 6.26 percent in 2006-07 over 2005-06 to touch 4.75 mt. Exports accelerated in the first six months of the current fiscal year, growing by 7.4 per cent to 2.6 mt from 2.42 per cent, in the same period last year.
Driven a booming economy and concomitant demand levels, consumption of steel has grown by 12.5 per cent during the last three years, well above the 6.9 per cent envisaged in the National Steel Policy.
Steel consumption amounted to 46.14 mt in 2006-07 compared to 41.43 mt in 2005-06, recording a growth rate of 11.36 per cent, which is higher than the world average. During the first half of the current year, steel consumption has grown by 13 per cent. A study done by the Credit Suisse Group says that India's steel consumption will continue to grow by 16 per cent annually till 2012, fuelled by demand for construction projects worth US$ 1 trillion.
The scope for raising the total consumption of steel in the country is huge, as the per capita steel consumption is only 35 kgs compared to 150 kg in the world and 250 kg in China.
With this surge in demand level, steel producers have been reporting encouraging results. For example, the top six companies, which account for 70 per cent of the total production capacity have recorded a year-on-year growth rate of 11.4 per cent, 12.7 per cent and 9.7 per cent in net sales, operating profit and net profit, respectively, during the second quarter of 2007-08.
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