Can India cash in on hot global steel market?

This is what is called staging a comeback with a steely ambition. India's steel capacity utilization had plunged in March-April 2020 thanks to the nationwide lockdown imposed to curb the spread of Covid-19. The worst seems to be over now and things are changing for the better, at least going by various production reports, uptake reports and analyst forecasts. India's steel production went up by almost 47 per cent in May this year, according to The World Steel Association (WSA) figures.

Most steel companies are expanding-both brownfield and greenfield. The industry has started the acquisition of closed steel plants and is gearing to increase production to ride over higher demand and prices both in India and across the globe. In FY22, steel production is expected to be the highest ever, looking at the vibrant business environment for the industry.

Many sector analysts think that the steel industries outside of China will potentially enter into a renaissance period. Developments in China are going to be key, given it produces more than half of the world's steel, mostly with coal-fired blast furnaces. The Chinese government has signalled it no longer wants to bear the huge environmental burden that entails, so it's seeking to curb production through measures such as firming up guidance on capacity swaps and removing export tax rebates. Countries other than China could actually fill the gap created by China's restrictive measures. India is set to boost capacity, with top producer JSW Group saying it will reach its goal of more than doubling capacity to 45 million tonne before 2030. Southeast Asia, including Malaysia and Indonesia, plans to add another 60 million tons by the end of this decade. India's other leading producer, Tata Steel, for example, has reported in the current quarter of fiscal year 2022, production of 4.62 million tons against 2.99 million in the same period last year.

According to a recent report by Indian credit ratings agency ICRA Ratings, India's total steel capacity in the fiscal year ending March 2022 will likely rise to 150 million tonne a year. ICRA has factored in capacity additions during the year, including a brownfield expansion by private-sector JSW Steel's Dolvi unit in the western state of Maharashtra. Jindal Steel, will set up an integrated steel plant with an annual production capacity of 2.25 million tonne in India's southern province of Andhra Pradesh. The State Investment Promotion Board approved Jindal Steel Andhra Limited's proposal to set up the multimillion-dollar integrated steel plant.

Steel prices have also surged throughout the world this year. And little wonder therefore that analysts feel that there's rarely been a better time to be in the steel business.

Prices have boomed worldwide this year, smashing record after record. Roaring industrial demand is propelling those rallies, with plants straining to boost supply after lying dormant during the pandemic. On top of that, powerhouses China and Russia are trying to limit exports to help other industries at home.