Global crude steel production data in the first three months of the current year have shown only marginal increase over last year. Russia has now surpassed India in steel production after China, Japan and USA in that order. It may be a temporary phenomenon as monthly production figures are estimates only and are subject to revision. Also, the difference, being marginal, can be made up in subsequent months. The scenario for steel production in the country in the coming months tells us that the brownfield and greenfield expansion undertaken by SAIL, Tata, Essar, JSW, Bhushan and NMDC is going on, albeit behind schedule. Within the category of ongoing greenfield projects, other than JSPL Angul, NMDC Chhattisgarh and Tata Kalinganagar and partially JSW Salboni, capacity enhancement through other projects may be delayed.
One big ticket investment via Posco greenfield project in Orissa is still very much on the cards with a delayed time schedule. In addition, a few other rolling capacities are being planned, like Tata-Nippon, Blue scope and Arcelor Mittal-Uttam, which would cater to the emerging demand of the value added segments for finished steel. It must be appreciated that with steel demand growing at a rate of 7-8% per annum in India in the next few years, lower than the projections made in the 12th Plan, the capacity expansion endeavours by various producers would continue in order to prevent a massive flow of imports.
The current capacity of 85 million tonne is slated to move up by 28-30 million tonne in the next 4 years? time. There may be one or two year?s slippages in this schedule. As a majority of this capacity is through BF-BOF route, the pressure on imported coking coal would also increase.
No other country in the world is planning capacity augmentation in steel of such a massive scale in the coming years. In the global market approximately 300 million tonne of excess capacity has been roughly assessed. Hence, there is no hindrance to achieve higher production level, but for lack of indigenous demand. USA, which is showing signs of partial revival in the economy and in steel demand is operating at 79% capacity utilisation. This is much higher than 65-70% utilisation rate at Russia. Japan is producing steel lower than last year.
The only stimulus to higher steel production by Russia and Japan and partly by US is provided by the growing demand from the emerging countries like India, West Asia, South East Asia and Africa. The remaining period of 2012 and the whole of 2013 may not show any secular rise of steel demand in Europe, Japan and even China. If India is to occupy a higher notch in the ranking of major steel producing country, it must plan its capacity enhancement schedule and implement it despite a number of odds to meet primarily the domestic demand or otherwise leave the field to other global players.
The author is DG, Institute of Steel Growth and Development. The views expressed are personal
