As the pandemic recedes, the steel sector is currently entering a commodity supercycle, a period of sustained high demand and narrow supply. They are marked by significant capital expenditure, and associated industrialisation and urbanisation. For steel companies, this marks as a landmark opportunity to cater to sustained and buoyant demand.
The Indian steel industry is currently operating at nearly 80% of combined capacity. As domestic steel consumption and exports increase, supply will need to rise concomitantly. This provides a significant headroom for Indian steelmakers to grow their capacities and cater to the rising demand. This is also aligned to the National Steel Policy, which aims to more than double India’s domestic steelmaking capacity to 300 MTPA by FY 2030-31.
The Indian government has announced the US$1.4 trillion National Infrastructure Pipeline (FY 2019-25), which is aimed at significantly enhancing India’s infrastructure landscape. Similarly, the ‘Housing for All’ scheme is also accelerating India’s residential infrastructure. These initiatives are expected to spur significant demand for India’s steel industry.
The National Steel Policy (NSP), unveiled in 2017, is a conducive plan for increasing the per capita steel consumption in India. Currently at ~64.2 kg (CY 2020), this is only 28% of the global apparent steel use per capita. The NSP proposes increasing this to 158 kg of finished steel consumption per capita by 2030-31.
Post the pandemic, global organisations and OEMs are shifting their focus away China in search of alternative manufacturing hubs. With its conducive policy environment, mission-level movement for self-reliance (Aatmanirbhar Bharat), rising competitiveness and improving ease of doing business scenario, India is well-placed to fill in this gap. As India turns into a globally preferred manufacturing hub, the domestic steel industry will receive a shot in the arm.
Recyclability in steel
Indian steel industry capacity utilisation
Total PLI scheme outlay
The Union Government has included manufacturing of specialty steel under the PLI scheme, with a total outlay of ` 6,322 crore. This move is set to attract capital investment, increase employment in the sector and encourage Indian steelmakers to move up the value chain.
The Indian steel industry is currently getting consolidated with efficient and large-scale players pursuing strong inorganic growth prospects. This will enable better progress in the organised steel sector, mainstreaming sustainability, policy advocacy and advanced manufacturing.
Steel is one of the most affordable and accessible building materials in the world. It is also equally sustainable and circular, with ~100% recyclability. With increasing innovation in the segment, steel is also being used as an alternative to several mainstream construction materials.
Traditionally, steel has been viewed as a contributor to the climate change crisis. However, with active, target-based decarbonisation drives being undertaken by steel companies worldwide, it’s being seen as a sector that can help the world achieve targets set forth by the Paris Agreement and the UN SDGs.
Post the COVID-19 pandemic, the preference for individual and private mobility has grown manifold. Together with the rising affluent class and disposable income, this proves to be a significant opportunity for automotive sector, which is a consumer industry of steel.
The pandemic has outlined the need for larger scale investments in public and private health infrastructure in the country. As more medical centres are built around the country, steel would remain a material that can support the future of India’s healthcare infrastructure.
