ISA Projects Growth
According to a recent forecast by the Indian Steel Association (ISA) based in New Delhi, India is likely to see a 7.5 percent growth rate annually in steel demand over a period of four years, which stretches from April 1 2020 until March 31 2024.
At that rate, the ISA predicts that steel demand in India will hit a record 128.85 million tons in the current 2023-2024 fiscal year, an increase of 7.99 million tons from 119.86 million tons in the preceding fiscal year. An even further spike of 6.3 percent is expected in 2024-2025, bringing the total demand close to 137 million tons when this period draws to a close.
In recent years, the ferrous scrap industry has seen an increase in exports to India from numerous nations with a surplus of scrap materials.
“Today’s 15 percent of scrap usage, which will increase to almost 25 percent in the next five years, [and] with the Vision of 2047 [ministry plan], that means the percentage of scrap for production of steel should go up to 50 percent, and [the sector will be] only 50 percent be dependent on iron ore,” the current Minister of Steel, Shri. Jyotiraditya Scindia, stated.
At the 2023 MRAI international Material Recycling Conference in Kochi, India, Scindia also explained, “as being the world’s second-largest steel producer, India needs to become a responsible steel producer and therefore, we anticipate incremental usage of scrap in the coming years.”
India’s Scrap Imports
The U.S. Commerce Department has reported that the amount of ferrous scrap imported to India skyrocketed in 2021, more than doubling from 439,000 metric tons to 923,000 metric tons.
“Steel is exported to India by FTA countries at lower than their domestic prices, which is nothing but dumping. We have been repeatedly raising the issue of cheap imports with the ministry,” Sahay said.
Last year, while Turkey was the top buyer of U.S. ferrous scrap, India lagged in comparison. Mexico, Bangladesh, Vietnam, Taiwan, and Malaysia all bought more than India in 2021.
ISA has expressed optimism for its prospects as a scrap buyer, stating that “in an otherwise gloomy global economic environment, India has been a bright spot, defying global trends.” Specifically, data from 2021-2022 suggests that India’s gross domestic product (GDP) rose 9.1 percent year-over-year and is estimated to have grown 7 percent in 2022-2023 fiscal year.
“The steel sector has benefited from strong economic growth as the correlation between growth in steel demand and GDP growth is quite strong, especially if the economy grows by around 6 percent or more, with the multiplier being more than one in such scenarios,” ISA notes.
Subsector Growth Anticipated
The ISA estimates that all subsectors associated with major steel-using industries are expected to show year-on-year growth of at least 6 percent over the next two fiscal years.
“The rising share of investment in GDP, backed by strong capital expenditure outlay by the government and improving private investments, will drive the construction, railways and capital goods sector,” the group says.
The government has additionally allocated a large portion of its increased capital expenditures for the 2024 fiscal year towards road and railway infrastructure projects. According to ISA, this outlay will have an immense impact with 33 percent of budgeted capital investments, totaling 50 percent dedicated to roads and railways. Consequently, it is highly likely that steel demand will experience considerable growth as a direct result.
Experts are convinced that certain industries, such as automotive and consumer durables, will show steady progress.
