India will continue to be a net importer of steel even after 2020 as supply will not be able to keep pace with demand in the country, a majority of speakers said at Metal Bulletin’s 8th Indian Iron and Steel conference in New Delhi.
Leaders from the Indian steel Industry, in their address to delegates, expressed concern at the slow pace of greenfield projects in the country, mainly due to delays in obtaining clearances, the allocation of iron ore mines and the availability of land for steel projects.
“India will have to import at least 3 million tonnes of steel in 2012 and that figure is likely to increase to more than 30 million tonnes by the year 2020 as supply may not be able to keep pace with demand if corrective measures are not taken now,” Jindal Steel and Power md and ceo VR Sharma said.
He said that the gap between demand and supply of steel at a capacity growth rate of 5% will be 55 million tonnes by 2020 or 30 million tonnes if the growth in capacity hits 8%.
The steel supply growth rate in India over the past five years has been at 5% while demand has been growing by 7-8%, he said.
Sharma said environmental clearances and land acquisitions were the main impediments to setting up greenfield steel plants, and that India’s infrastructure would not be able to support the 200-million-tpy steel capacity envisaged by the year 2020.
For every tonne of steel made in the country, four tonnes of material has to be moved, he said, adding that Indian ports, roads and railways are not equipped to handle the growth in freight traffic.
India’s steel imports will cost the country $40-50 billion by 2020, he said.
Essar Steel ceo and md Dilip Oommen said more than 220 memoranda of understanding have been signed to set up steel plants, but progress on these projects has been “painstakingly” slow.
“The current capacity is about 80 million tonnes and future demand for steel in India will depend on its GDP, but we are already talking about 200 million tpy of capacity requirement by 2020 – we have to create a road map to achieve this capacity,” he said.
Sushim Banerjee, director of India’s Institute for Steel Development and Growth, also voiced concerns about increasing imports in the near term.
“There is a likelihood of increasing volumes of imports in the next five to six years as greenfield expansions have been held up or delayed due to issues relating to land acquisition, mining and mineral development... and infrastructure,” he said.
However, JSW Steel’s senior vp for marketing, Sharad Mahindra, said India has emerged as the third-largest steel consumer on rising domestic demand, that its dependence on imports was reducing and the country has not shown any negative growth in steel since 1995.
Demand in India was well supported by huge infrastructure spending coupled with growth in housing, consumer durables, auto and capital goods industry, he added.
Mahindra told delegates that India has graduated to become the fifth-largest producer of passenger vehicles, after replacing Brazil in 2011, and is emerging as a leading player in the automotive sector.
He also pointed out that exports of steel to the Middle East, Southeast Asia and Africa have increased significantly compared with four to five years ago.
He told delegates demand for Indian steel will remain healthy both domestically and internationally.