The India Steel & Iron Industry growth review for 2019

Indian steel and iron industry are growing at a steady rate. Though there were some upheavals the industry has witnessed in 2018, it is likely to grow significantly in 2019. The Moody's Investors Service predicts that the steel consumption of India is rising steadily from 5.5 to 6 per cent, contributing the GDP growth of 7.3 to 7.5 per cent. Even for investors, 2019 would be a game-changer year as steel rates in India are rising steadily.

In this blog post, we have compiled all the insights that you need to know about the steel and iron industry that might help you to determine the expectations of the industry in 2019.

Global Steel Demand

If you keep a sharp eye on steel and iron global demand, you must remember that in 2015, there was a shrinkage of -3.0% in global steel demand. However, after that, the steel demand is rising consistently and you can expect the same in 2019 too. As per the Short Range Outlook of the World Steel Association (worldsteel), the global steel demand in 2019 would reach 1 681.2 million tonnes with a growth rate of 1.45 compared to 2018.

Steel consumption growth in India

The total steel demand in India will overtake the US steel demand in 2019, as per worldsteel forecast. With each passing year, the steel demand in India is increasing and daily steel rates too. With big announcements in the sectors of infrastructure and investments, we are likely to see a huge development in the total consumption and demand for steel in India.

Its impacts:

The rise in domestic demand

For the FY19 YTD, the domestic steel consumption growth will remain robust at approximately 8.2% growth. Furthermore, experts also predict that imports and exports will also remain steady with a total import quantity of 1mntpa. However, we will see that domestic prices outshining regional prices with an increase in net imports in the first quarter of 2019. If the imports will increase, the domestic prices will go down significantly.

Raw materials

In recent years, the thermal coal production is witnessing crucial rise, but still, its usage is limited to the steel sector as most of the thermal coal is used in the sponge iron industry. The Indian government is still giving priority to power plants for the steel sector.

Furthermore, as per the Indian Captive Power Producers Association (ICPPA), the coal-based steel, power and aluminium plants face a shortage of the fuel due to lack of railway rakes. However, the government is addressing logistic issues seriously.

What will be the role of China when it comes to steel production and consumption?

Industrial experts predict that China’s steel demand will remain flat due to various reasons including economic rebalancing and stringent environmental regulations in the country. Experts depict that the overall steel demand growth of China will decline in 2019.

Other Southeast Asian countries

Experts also predict that the demand for steel in the ASEAN region is expected to grow by 6.8 per cent in 2019.

A probability of metal price rise

There is a huge demand for metals such as copper, aluminium, and nickel in various metal-using sectors such as the manufacturing of electric vehicles and the power sector. It clearly depicts that the metal prices will increase in the next year, keeping in the mind that the demand is high than supply.

Furthermore, worldwide infrastructure development and investments in the construction and manufacturing sectors will subsequently increase the metal prices.

What the Indian government is planning to do?

The government of India has set some targets for the steel industry. Some of the focus areas are to increase per capital steel consumption, searching for new markets for Indian made steel and emphasis on developing new special steel.

Furthermore, the government also has set a target to produce 300 mnt crude steel by 2030. Mr Chaudhary Birender Singh, Union Steel Minister said that Indian per capital steel production is very low, just 68 kg compared to the world average of 208 kg.

In addition to that, he also concluded that India has the capacity to become the number one steel producing nation in the world and its special focus in 2019 would be to increase the production of special steel.

For investors in steel and iron metals, 2019 would be a year of opportunities as steel prices in India would increase with time.