Figures by worldsteel’s October Short Range Outlook also find likely that India will become #2 in steel use by the end of 2019 with an increase in steel demand by 7.3%, Adam Szewczyk, Head, Data Management, World Steel Association, informed.
Namely, India’s apparent steel use per capita for finished steel products stood at 66.2 kg, way below the world average of 212.3 kg in 2017, which suggests that India has a huge unrealised potential for steel demand growth.
The growth in steel use is mostly driven by India's recent efforts to unleash this through an extensive reform agenda to clear institutional bottlenecks and an ongoing push for infrastructure development, in combination with favourable demographics, Mr. Szewczyk further explained.
Meanwhile, projects like industrial corridors (connecting existing industrial cities and develop manufacturing sectors) and Sagarmala (connecting states through waterways) are expected to increase India’s connectivity, reducing logistical costs of transportation across Indian states.
The Smart Cities initiatives will further boost urban infrastructure investment, while the outlook for India’s manufacturing sector, which has been lagging behind the service sector as a growth driver, should improve:
- The Make in India initiative, which aims to transform India into a global design and manufacturing hub, will support the further development of steel using sectors along the industrial and freight corridors.
- Many states are expected to develop automotive and ancillary industries, to be a global auto hub for small cars with a focus on exports. Lastly, some states are also expected to strengthen their mechanical machinery sector.
All these factors point to a high potential for steel demand growth in India, but how fast the potential can be realised will depend upon whether India can successfully implement both its reform agenda and infrastructure plans.