New Delhi/Mumbai: Steel demand in India is gathering speed amid an infrastructure building boom that’s set to more than double capacity of the nation’s mills, according to the government.
“We’re expecting domestic consumption to accelerate in the decade between 2020-2030," Steel secretary Aruna Sharma said in New Delhi. Annual capacity stands at 126 million metric tonnes and is forecast to rise to 150 million tonnes by 2021, before settling at 300 million tonnes, she said.
India is in the midst of a wave of urbanization that is set to boost demand for everything from copper to iron ore to steel as the economy expands over the next two decades, according to an Australian government report. It’s taken seven years for per capita steel consumption to rise to 60 kilograms from 50 kilograms and just 18 months to get to 64 kilograms this year, Sharma said.
While the government’s push on infrastructure will be the main driver for rising demand, the ministry is also seeking to boost steel’s use in structures including pipes for drinking water, Sharma said in an interview on 6 October.
India’s finished steel consumption rose 4.3% to 43 million tonnes in the six months to September, while output climbed 5% to 52 million tonnes, according to the steel ministry. In the financial year ended 31 March, usage grew 3% to 84 million tonnes, the slowest pace in three years, even as production gained 11% to a record 101 million tonnes.
India is set to displace Japan as the world’s second-largest steel producer, and by 2022 will churn out 146 million tons compared with 118 million tons from Japan, according to an April report from Australia’s Department of Industry, Innovation and Science. That compares with an estimated 785 million tonnes of production in 2022 by industry leader China, it said.
The optimistic outlook for the industry amid record volumes, a price recovery and higher demand has sparked a surge in shares of Indian mills. Tata Steel Ltd has rallied 76% this year in Mumbai, the best performer on the benchmark S&P BSE Sensex Index, and JSW Steel Ltd is up 59%.
The nation’s growing steel capacity may offer an additional source of demand for the top iron ore miners, including BHP Billiton Ltd, Rio Tinto Group and Fortescue Metals Group Ltd. India is a potential “sleeper" that will add to demand growth as steel use rises, Fortescue’s chief executive officer Nev Power said in August. Bloomberg