Strategies for acceleration

Global steel 2013

A new world, a new strategy

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Despite the challenges that the Indian steel industry is going through, there is a major opportunity to be seized by the Indian and global steel sector players.

The long-term outlook for steel demand in India is quite robust due to increasing demand from several sectors, including automotive, consumer durables, oil and gas, industrial machinery, real estate and infrastructure.

For India to be the next steel powerhouse, some comprehensive strategies would need to be adopted. Here is a summary of approaches:

  • Innovate and customize products that are relevant to latent rural demand — 70% of India’s population still has a per capita steel consumption of only 13kg
  • Optimize product mix to address the shifting composition of steel demand for diverse applications in high-growth or emerging sectors
  • Improve the logistics infrastructure to handle both inbound and outbound traffic of steel industry with growing volumes, and in turn provide impetus to steel demand
  • Sustain and boost stakeholders’ confidence and risk appetite of investors and lenders for sourcing the fund requirements for growth
  • Frame a sector-level strategy on raw materials and access rights, to be followed by harmonization of procedures
  • Assess, process and add value to iron ore to leverage availability of grades,
  • Continue to adopt new technologies for moving up the value chain, increasing efficiency and rationalizing usage of natural capital for long-term sustainability
  • Improve governance practices in mining and steel businesses to address challenges to the social license to operate
  • Form special-purpose vehicles for carefully identified zones where mega steel development can be initiated with confidence, with all key approvals in place to fast-track development of the industry
  • Outlook: What the future holds

    The long-term outlook for steel demand in India is quite robust due to increasing demand from several sectors, including automotive, consumer durables, oil and gas, industrial machinery, real estate and infrastructure.

    Though there could be supply constraints in India in 2013, steel prices are likely to remain under pressure due to a steady stream of imports. There have been sharp increases in capacity in Korea with demand remaining stagnant and a slowdown in steel demand in Japan, leading to increased exports to India, partly due to free trade agreements with these countries.

    However, domestic oversupply concerns may resurface during 2014–15 when all of the new capacity becomes operational. The new capacity in India will be vertically integrated and have the ability to use fines as raw material.

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