As the economic growth of India and China is being watched by the world with awe, the prices of almost all the metals are depended on the rising demand from these two nations. Steel is no exception.
In the coming year, demand fro steel will be mostly decided by India and China. According to the World Steel Association, growth in global steel demand is expected to slow to 5.3% in 2011 but to still hit a record 1.34 billion tonnes.
Demand will be led by countries such as Brazil, Russia, India and China, while growth in the developed world will be slower as maturing economies struggle to recover from the global downturn.
Experts said the global consumption of steel, driven by India and China will continue to grow but at a slower pace compared to the recent extraordinary past. China and India are very highly investment driven, which translates to employment, urbanization, disposable income and therefore growth. Whereas the advanced economies are struggling with consumption because of employment and debt problems.
Chinese domestic consumption of crude steel is seen growing by 8% to 9% to 650 million tonnes in 2011. China crude steel production may be 680 million tonnes and consumption 650 million tonnes in 2012, which would be at or close to the peak.
The combination of China and India is extremely positive for the global steel industry. The net effect of China growth and accelerating India growth is going to have some very serious implications for steel making raw materials they will be driving demand for coal and iron ore, said an analyst.
Domestic steel demand is likely to rise by 9-10 per cent for the 2010-11 fiscal in India. The demand will be driven by the automobile, infrastructure and consumer durables sector.
Eyeing this opportunity, India’s steel makers are planning to increase their production. Tata Steel, which currently enjoys 40 per cent of the autograde steel in India, is setting up a continuous annealing line in a joint venture with its long standing technical partner Nippon Steel of Japan.
JSW Steel, too, has tied-up with JFE Corporation of Japan and will be setting up an autosteel line at its Vijayanagar steel plant. Its 10-million-tonne steel plant at West Bengal is earmarked majorly for autosteel and value added products.
Essar Steel has a 20-25 per cent share of the autosteel market in India and has started a hunt for a technology partner to further its auto steel share in the Indian market. SAIL is completely exiting the raw and semi finished steel market and is betting big on finished steel.