Low per capita consumption rate to boost demand for steel

World's second largest crude steel manufacturer, India is likely to see further growth in demand in the calendar year 2019 and 2020, as per reports of Indian Steel Association.

The Indian Steel Association has said that steel demand in India is likely to grow by 7.1 per cent in the calendar year 2019 and by 7.2 per cent in the next calendar year 2020 driven by sectors like construction, capital goods and railways. As for financial years 2019-20 and 2020-21, it forecasted steel demand to grow by 7.2 per cent. Besides, it noted that the country’s steel consumption is poised to cross the psychological 100-million tonne (MT) mark in 2019. The higher consumption rate may be attributed to India’s reform agenda and a higher growth rate in world economics. Key projects such Industrial corridors, Sagarmala and smart cities are in focus to give demand boost to steel.

The current low per capita consumption in comparison to the world average gives a larger scope for such a stellar growth in the steel industry. India’s per capita consumption stood at 68 kg while the world average is 208 kg. This also gives more room to rise in production capacity too. As of 2018, total production capacity stood at 125.8 MT with an average utilization rate of 76 per cent. Recently, Union Minister of Steel, Chaudhary Birender Singh stated that India’s capacity is aimed to reach 300 MT by 2030. He also further added that the Indian Steel Industry has robust consumption and production rate of 8.4 per cent and 4.5 per cent in the first nine months of FY19.

Companies such as Tata Steel, JSW Steel, Jindal Steel, SAIL are the major players in the Indian steel sector. These companies are considered to be potential beneficiaries of growth in the steel industry. Although there is government's impetus for the steel sector, implementation will be the key to success.