Global economic review

Strong demand growth in developing countries (46% of global growth in 2010) enabled the global economy to expand 3.9% in 2010 against a negative growth of 2.2% in 2009. GDP in low and middle-income countries expanded 7% during 2010 (5.2% excluding India and China). While developing countries regained growth rates close to those observed in the pre-crisis period, high-income countries (Europe and Central Asia) did not make major inroads on account of high unemployment and spare capacity.

Indian economic review

India’s GDP rebounded from 8% in 2009-10 to 8.6% in 2010-11, following a recovery in its agriculture and manufacturing sectors. Mining declined 6.2% in 2010-11 against 6.9% in 2009-10.

Steel industry

Global :

Global crude steel production was 1,414 mmt in 2010, an increase of approx. 15% over 2009. All major steel-producing countries showed double-digit growth in 2010. Asian steel production increased 11.6% from 2009 to 897.9 mmt in 2010; its share of world steel production declined to 63.5% in 2010 from 65.5% in 2009. China’s crude steel production in 2010 stood at 626.7 mmt an increase of 9.3% over 2009; its share of world crude steel production declined from 46.7% in 2009 to 44.3% in 2010.

India :

India maintained its position as the world’s fifth largest steel producer in 2010, recording a 11.3% growth. India presents high-growth potential with per capita finished steel consumption of a mere 54 kg compared with 430 kg in China and 200 kg globally. Urban steel consumption is expected to touch 165 kg per capita by 2019-20, reflecting growth potential, while India’s rural per capita steel consumption is only 2 kg. The Government has set a target for raising per capita rural steel consumption to 4 kg by 2019-20, implying an increasing demand. According to Ministry of Steel estimates, India is expected to add around 200 mmt capacity in this decade, increasing overall crude steel capacity from 78 mmt in 2010-11 to around 280-290 mmt by 2020. India is expected to emerge as the world’s second-largest steel producer by 2015-16.

Outlook

The present finished steel consumption in India is still at a very low level compared to developed countries. The estimated urban consumption per capita per annum was around 95 kg in India during 2007, and is expected to reach approximately 165 kg in 2019-20. The growth is expected to be driven by anticipated growth in construction, automobile, oil and gas transportation and infrastructure sectors of the economy.

The Government also proposes to undertake measures to promote usage of steel in bridges, crash barriers, flyovers and building construction. The rural consumption of steel in India remains at around 2 kg per capita per annum, primarily because steel is perceived to be expensive. The Government has set a target for raising the per capita rural consumption of steel to 4 kg per annum by 2019-20, implying a CAGR of 4.4%.

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