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Capacity expansion of steel to touch 31mn tonne in Q4: Assocham

Capacity expansion of steel to touch 31mn tonne in Q4: Assocham
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First Published: Mon, May 12 2008. 03 32 PM IST
Updated: Mon, May 12 2008. 03 32 PM IST
New Delhi: With steel prices increasing by more than 30% in 2008, the industry announced capacity expansion plans of 31 million tonne in the last quarter of 2007-08, in order to meet growing demand, according to a study carried out by Assocham.
The sector has attracted Rs1,22,950 crore of capex announcements in Q3 of fiscal 2008. There is a commitment to spend Rs2,12,190 crore in capacity expansion over October 2007-March 2008. About 90% of total investments will be to build new steel plants and remainder10% to expand plant capacity and build steel processing units.
Key Findings
* Steel industry has lined up investments of Rs89,240 crore in the coming three months
* While steel production grew at only 5.2% in 2007-08, consumption grew at 11.72%
* Total production of finished steel in the country was about 55.26 million tonne in 2007-08, as against consumption of almost 51.80 million tonne; more than expected growth in demand coupled with rising raw material prices has been pushing steel prices up
* Findings of the study suggest that capacity augmentation plans announced by India Inc during Jan-Mar 2008 alone may increase production capacity to about 85 million tonne
* Iron ore and coal rich Orissa attracted almost half the total capex announcements made in the steel sector with planned investments of about Rs45,000 crore
* Prominent destinations chosen by steel companies to build steel plants are Chhattisgarh, West Bengal and Jharkhand; amount of capital expenditure is roughly Rs16,000 crore, Rs11,900 crore and Rs7,000 crore respectively
* With economy expected to expand at 7-8% in the next few years, demand of steel is likely to increase correspondingly
* Corporate India plans to install nearly 18.5 million tonne of steel plants in Orissa; Chhattisgarh, West Bengal and Jharkhand are expected to host 5 million tonne, 3.7 million tonne and 3 million tonne steel plants respectively
* Bhushan steel has earmarked Rs26,000 crore for building 12 million tonne capacity in West Bengal, Jharkhand and Orissa
* Vedanta Resources plans to spend Rs24,000 crore to enter the steel sector and will be located in Orissa with a capacity of 5 million tonne
*Tata Steel will build a 5 million tonne plant in Chhattisgarh with an outlay of around Rs16,000 crore; Mesco Steel will deploy Rs10,000 crore for expansion of two of its steel plants situated in Orissa
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First Published: Mon, May 12 2008. 03 32 PM IST