As China is entering into a consolidation phase due to rising covid cases and a slumpy real estate breakdown and US & Europe is likely to enter into a recession, India is poised to emerge as a savior for flagging global steel demand.
India, which is poised to overtake China as the world’s most populous country by next year, is in the middle of a massive infrastructure-building boom. The Indian Government is using the country’s funds to modernize roads, rail networks, and ports in an attempt to capitalize on the China + 1 policy and to replace china as a manufacturing hub. The Modi govt’s plan to increase CAPEX is turning out to be a masterstroke for India as well as for India as the entire world economy is in the doldrums
India had already overtaken the US to become the world’s second-largest steel consumer this year after China a couple of years ago. According to the world steel association. India’s growing demand for steel will translate into a 6.7% jump in steel demand to around 120 million tons in 2023.
Jayant Acharya, deputy managing director of JSW STEEL Ltd says “The nation-building phase of any economy requires a lot of steel and commodities and India is going through that phase in this decade and it could boost the country’s steel consumption to over 200 million tons by 2030.
India produces the vast majority of the steel it uses, however, due to the increased infra boom it’s also being forced to import more to meet the surge in demand. The shipments from other countries rose by15% this April through October from a year earlier to 3.1 million tons. This has become a concern for local producers as cheap imports will dry up the demand for traditional steel producers. China accounted for more than a quarter of these imports in October as shown by the government data. A.K Hazara deputy secretary general at the Indian steel association has said that the quality of the steel is sub-standard and has requested the authorities to look into such critical matters
Even though steel consumption is growing at a tremendous rate, India as a country is still behind its rival Asian powerhouse in terms of steel consumption. According to data provided by the World steel association the demand for steel next year will be less than a seventh of China’s 914 million tons
In order to compete with China in the future the Modi government has estimated that $1.4 trillion of funding will be needed for the National Infrastructure Pipeline through 2025. How fast India can narrow the gap will be totally dependent upon the success of PM Modi’s construction rollout.
China’s real-estate problems and covid-19 wreckage will keep its steel demand suppressed next year. Jayant Roy, senior vice president at ICRA ltd have aid that “ over the long term, it would depend on the recovery of the property sector on the one hand, and the government’s policy of an infrastructure-led economic growth model in china”
