Iron & Steel industry is the backbone of any economy and their co-relation is quite direct and linear. This means that the fortune of steel sector depends on the general condition of the economy and is also a measure of health of any economy.
When we say that western world economy has slowed down, naturally its steel appetite has reduced resulting in lower steel consumption as well as production. In Asian region, the infrastructure building is the main agenda which requires huge quantities of steel and also other metals. This serves as a very big trigger for the regional economy.
If we look at the famous economic curve, India is at the starting point of the steep section of the curve whereas China is towards the end of this section. This means that countries like China have surpassed their best growth period and very soon their growth will be plateaued. On the other hand countries like India are about to enter or just entered the fast growth period of the economy. The next one or two decades are expected to witness a fast economic growth in India and as mentioned earlier, it has a direct co-relation with the iron & steel sector.
We all know that last 2/3 years were quite challenging for Indian steel mills. Rise in input costs, stagnated demand, shrinking exports and cheap imports had really destroyed the bottomline of many steel companies. Now the raw material situation has gradually improved, mega infra projects have started moving ahead and the steel demand seems to have started increasing. Export situation has improved a bit and most importantly the Indian government has given some protection to domestic mills in the form of ‘Minimum Import Price’ (MIP). All this has helped the industry to stabilize and expect an upward transition in next few months. The quarterly results of big steel mills announced recently manifest a similar sentiment.
Of course, this no way means that Indian steel industry is free from problems. If they have to meet a target of 300 mtpa by 2031, they have to look into and improve almost all areas including raw materials availability, land acquisition issue, demand escalation and even the availability of technical manpower.
Today, India is not even producing 100 mtpa and I know many steel mills are operating without a qualified metallurgist !