India’s current installed capacity of 110-112 tons is unlikely to touch 138 million tons in 2017 and this milestone can be achieved only in 2019, said Sushim Banerjee, Director General, Institute for Steel Development & Growth (jointly promoted by the Ministry of Steel and steel producers).
He was speaking to ISMW on the sidelines of a seminar on “Survival Strategies & Cost-effective Technologies for Indian Steel Industry,” organised by Steel & Metallurgy (a steel publication).
Referring to the OECD’s recent paper on excess steel capacity and projections, which says India’s current installed capacity of 110-112 mt will grow to 138 mt by 2017, Banerjee said: “I feel this is somewhat overstated because I don’t think another 30 mt is likely to be added within the current and next years in the Indian scenario. This projected 138 mt is not likely to come before another two years, ie, till 2019.”
He added that if one does a back-of-the-envelope calculation, India’s demand growth will be 7-8% and finished steel demand will reach 97-100 mt in another two years. That will more or less match with the brownfield expansion plans of SAIL and JSW and, to some extent, the greenfield expansion of Tata Steel at Kalinganagar and thus the 138 million tons cannot come before 2019.
“From where will that additional 28-30 mt of additional steel come? There is no greenfield venture except for the 3-mt Kalinganagar plant of Tata Steel. And that too, it will take one or two years for phase I of the plant to stabilise. Then can phase II be started. I don’t think this 30 mt will come in 2 years’ time. It will take about four years from 2016,” he elaborated.
But he was also quick to add that if demand goes up at a very high rate, then of course, the scenario may change. But that will depend on not only India but factors in other countries too. Exports are a market, where if prices continue to be lower, then there will be a problem. Now, in every country domestic prices are higher than export prices. Thus, manufacturers are today more aligned to meeting domestic demand because that will fetch higher realisations.