India to become second largest steel producer by 2015

Construction and infrastructure sector together have had the highest demand for steel in India, about more than 60%. Finished steel production in 2011-12 stood at 70.32 million MT and is forecast to touch 92.29 million MT in 2015-16, according to a market insight from Frost & Sullivan. “India is the world’s fourth largest producer of crude steel and if all planned capacity expansion projects become operational, it is expected to become the world’s second largest producer by 2015”, said Venkatesan Subramanian, Director, Metals & Minerals, Frost & Sullivan.

He added, “Around 300 MoUs have been signed with various states for planned capacity of around 488.56 million MT by 2020 and major investments are planned for the states of Orissa, Jharkhand, Karnataka, Chhattisgarh and West Bengal. The intended steel capacity build-up in the country is likely to result in an investment of approximately INR 5,000-10,000 billion by 2020.”

“Among steel intensive industries in India, construction registered the highest growth rates over the past consecutive five years. Manufacturing is the second highest steel consumer segment followed by automotive, both of which are poised to witness impressive growth over the future”, noted Subramanian.

Market Insight from Frost & Sullivan finds that overall steel consumption in India was around 67 million metric tonnes (MT) per annum and the GDP growth was about 8% in 2011, compared to 30.7 million MT per annum consumption of steel and GDP growth of about 3.8% a decade ago, in 2001. Favourable government policies for this sector along with the country’s economic growth have contributed to the steel sector’s fast paced growth.Production of crude steel increased from 27.3 million MT to 71.3 million MT in the last 10 years at a compound annual growth rate (CAGR) of 10% due to advancements in traditional steel making. Electric arc and induction furnaces have been the key drivers for increase in crude steel production. Indian crude steel production capacity is expected to reach 112.5 million MT by FY 2016. In 2010-11, total installed capacity stood at 78 million MT and capacity utilisation was in the range of 84%.