The Rise and Rise of India's Steel Industry

Ever since the break-up of the Soviet Union in 1991, the three largest steel producers have been China, Japan and the US. Before China secured the top slot in 1996, the largest producer had been Japan. Since then, Japan has remained the second largest steel maker with output in 2016 totalling 105 million tonnes. This status quo is being threatened by India where, over the same time frame, production has increased four-fold to nearly 97 million tonnes. In addition, India overtook the US to become the third largest global producer in 2015.

So far this year, Indian crude steel production has increased by a further 6% whereas Japan has seen production remain broadly flat. If this rate of growth continues into December, Japanese production would be 104 million tonnes and Indian production would have hit 101.5 million tonnes for the year. Whilst it is unlikely that India will displace Japan this year it should overtake Japan next year to become the second largest steel producer.

In recent years, India has been exporting and importing similar quantities of steel but this has diverged considerably in the year to date 2017. Imports have declined by 13% whereas exports have increased by 67%. The huge jump this year represents a record total but globally India is still a relatively modest exporter, shipping less than half the tonnage of Japan. Despite this, given the huge quantities of steel being produced in the country, the big jump in exports should act as a warning sign to other global producers.

Most of India’s exports are concentrated on flat products and India is a net exporter of HRC, CR and HDG products. Exports of hot rolled coil have more than trebled so far this year and in the year to September they have hit nearly hit 4 million tonnes. The main destination for this HRC is Vietnam, which has increased more than five-fold to 1.2 million tonnes, replacing some of the tonnage that China had been supplying There has also been growth in shipments to Europe with a four-fold increase in exports to Italy and a doubling of shipments to Belgium at 593 thousand tonnes and 215 thousand tonnes respectively.

Going forward, India is almost certain to overtake Japan as the second largest producer of steel next year. Historically much of India’s production has been consumed internally, and this remains the case, but the massive growth in exports this year suggests that this scenario has the potential to change. India is already making an impact on the global steel market and should projected domestic demand growth not materialise, Indian exports have the potential to become very significant.

This post was prepared by the Iron and Steel Statistics Bureau. You can visit ISSB at http://www.issb.co.uk.

blogger@steelonthenet.com

Virus-free. www.avg.com

Growth in Indian steel exports

Much has been made of the meteoric rise of Chinese steelmaking over the past decade but as we have discussed before this peaked in 2014. There is another major Asian steel producer, believed to be the lowest cost major producer in the region, that has more than doubled crude steel production since 2005 and is continuing to grow, posting a record 95.6 million tonnes last year, a growth of 7% compared to the global growth rate which was just 1%. After the record tonnage posted last year, in the first five months of 2017, Indian crude steel production grew by another 7%. At this point in 2018, if the rate of growth stays the same, India will have overtaken Japan to become the second largest producer of steel in the world. This growth in steel production has coincided with a decline in imports. At just under 10 million tonnes, imports are relatively modest for a country of this size and last year they collapsed by 25%. This decline has continued into the first quarter of 2017 with Q1 imports declining by another 43% year on year with falls seen across most products. There have been declines in supplies across most origin countries but Brazil and China seem to have been hardest hit. Whilst China is still, just about, the largest supplier of steel to India, imports have decreased by 64% so far this year as anti-dumping legislation has taken effect. Conversely there has been a huge increase in exports. Last year there was a 37% growth in exports and at 10.3 million tonnes, the country became a net steel exporter for the first time. So far this year, export growth has accelerated considerably and Q1 saw a 157% hike in exports to more than 5 million tonnes which, if maintained for the rest of the year, would make the country the 6th largest exporter in the world. The growth has mostly come from HRC, CRC and semis with the EU accounting for the bulk of this increase. Indeed, in Q1 alone, India increased exports to the EU by more than 1.2 million tonnes with Italy, Spain and Belgium seeing most of this growth. According to the union minister of steel, the country is targeting a trebling of last year's production total by the end of 2031 with the focus being on higher-value finished products. Although projections for internal steel demand are also high, it seems clear that a proportion of this growth will make its way into exports. We have a situation where India is likely to become the second largest producer of steel in the world next year, where imports are dropping, being discouraged by robust anti-dumping legislation, and exports are set to more than double, with EU markets being the main targets. Having been a net steel consumer in the past, India is now becoming a major supplier to the global market, at least in specific product areas and to certain markets. For a file showing Indian exports by product, please follow this link or visit the ISSB for further information.