Domestic steel production to remain high in 2017-18

28 April 2017

Domestic steel production is expected to remain high in the current year 2017-18 and is likely to rise by around 8-10%, an industry research report by CARE Ratings has said. However, steel prices may rise going forward as steel producers are expected to face increased cost pressure due to supply disruption and a steep surge in coking coal prices on account of Cyclone Debbie in Australia. The latter accounts for around 70% of India’s coking coal requirements that are fulfilled through imports.

Sharing its outlook for steel industry in the current year, the latest report by the agency said government allocation for infrastructure in the union budget 2017-18 is expected to act as driver for construction and infrastructure in the country. Additionally, the National Steel Policy 2017 also aims to raise steel production the report pointed out.

A number of steps by the government are likely to increase domestic steel consumption and thereby production it said. It includes Pradhan Mantri Awas Yojana, Make in India campaign, encouraging use of Made in India steel for various projects and spending in areas like railways, roads and urban development. Domestic producers are also increasing steel producing capacities expecting an increase in demand for steel of account of several initiatives taken by the government.

Incidentally, India’s crude steel production grew by 4-5.5% during financial years 2012-14 on year on year basis. It stood at 81.69 million tonne (mt) in 2013-14 and 81.69 mt in 2012-13, while output grew 8.9% to 988.98 mt in 2014-15. In 2015-16 it saw a subdued growth and went up marginally by 0.89% to 89.78 mt, before gaining momentum and rising 9.4% to 89.11 mt in April 2016-Feb 2017 as steel producers raised output backed by government’s strong measures like Minimium Import Price to rein in  cheaper imports.