Released July 15, 2013 | JOHANNESBURG
en
Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Following the model of its ultra-mega power projects (UMPPs), the Indian government is now pursuing the concept of ultra-mega steel plants (UMSPs). Prime Minister Manmohan Singh approved the Steel Ministry's proposal for the new plants, each of which would involve an investment of about $7.5 billion. The approval was granted at a meeting of the high-level committee on manufacturing.
The approval was opposed by the coal and mines ministries, which contend that, at a time when there is a glut in supply, there is no need to add production such a large scale, especially since it will make huge demands on the scarce coal supply. Rather than support UMSPs, they suggest that steel could be imported less expensively from China and the CIS countries. Currently, annual Indian domestic steel production stands at 79.5 million tons, with imports running at less than 5 million tons.
Demand is set to grow at about 8% through 2017, slightly above the annual GDP growth rate. If steel production continues to grow at its current rate, with USMP contributions, another 30 million tons will be added to capacity in the next two years, which would render any supply shortfall marginal at the worst. This scenario tends to support the objectors' views.
However, the Steel Ministry is confident of its own data, which indicates that the demand for steel will reach 280 million tons through 2025. This represents a compounded annual growth rate of 13.35%, which justifies the need for the USMP strategy that the prime minister supports. Infrastructure expansion requires investments to provide steel inputs, and the steel companies welcome the opportunity to meet growing demand. The UMSPs can be the resource to meet the manufacturing potential and reduce the need for rising imports. They also can generate investment in the steel sector, boosting the potential for local job creation.
For related information, see July 5, 2013, article - India Awards $19.5 Billion in Infra-Projects to Boost Steel Demand.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
The approval was opposed by the coal and mines ministries, which contend that, at a time when there is a glut in supply, there is no need to add production such a large scale, especially since it will make huge demands on the scarce coal supply. Rather than support UMSPs, they suggest that steel could be imported less expensively from China and the CIS countries. Currently, annual Indian domestic steel production stands at 79.5 million tons, with imports running at less than 5 million tons.
Demand is set to grow at about 8% through 2017, slightly above the annual GDP growth rate. If steel production continues to grow at its current rate, with USMP contributions, another 30 million tons will be added to capacity in the next two years, which would render any supply shortfall marginal at the worst. This scenario tends to support the objectors' views.
However, the Steel Ministry is confident of its own data, which indicates that the demand for steel will reach 280 million tons through 2025. This represents a compounded annual growth rate of 13.35%, which justifies the need for the USMP strategy that the prime minister supports. Infrastructure expansion requires investments to provide steel inputs, and the steel companies welcome the opportunity to meet growing demand. The UMSPs can be the resource to meet the manufacturing potential and reduce the need for rising imports. They also can generate investment in the steel sector, boosting the potential for local job creation.
For related information, see July 5, 2013, article - India Awards $19.5 Billion in Infra-Projects to Boost Steel Demand.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
