Riding high on the resurgent economy and rising demand, the Indian steel industry has entered into a new development stage from 2005-06, with an average growth rate of 12 per cent per annum in steel output, for the last two years.

Production

The rapid rise in production has resulted in India becoming the world’s 5th largest producer of steel, up by two places, on the back of 50.71 million tons (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.

While the demand for steel will continue to grow in traditional sectors such as infrastructure, construction, housing automotive, steel tubes and pipes, consumer durables, packaging, and ground transportation, specialized steel will be increasingly used in hi-tech engineering industries such as power generation, petrochemicals, fertilizers, etc.

In the first half of FY07 (April-September), production of finished carbon steel was estimated at 24.8 MT – against 23.25 MT in the same period of the previous year – recording a growth rate of 6.6 per cent. During this period, pig iron production recorded a growth of 7.9 per cent, at 2.58 MT.

Presently, the government plans to increase production from the present 53 MT to 124 MT by 2011 and 200 MT by 2020, so as to narrow the gap between supply and demand. However, access to coking coal will be the key to the success of this strategy.

According to a report by the World Steel Dynamics (WSD), a leading global steel information service, the Indian steel industry has entered a period of massive growth not only in steel demand but also in steel making capacities.

Consumption

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. For 2008 it has been forecast that the apparent steel use point in India will increase by 11.8 per cent in 2008.

Steel consumption amounted to 46.14 MT in 2006-07, against 41.43 MT in 2005-06, recording 11.36 per cent growth – higher than the world average. During the first half of 2007, steel consumption has grown by 13 per cent. For the period of April-September 2007-08, the total consumption (excluding double counting) of steel is 21.998 MT as compared to the 19.819 MT in the same period last year (as per data from the joint parliamentary committee).