Indian Steel Industry Likely To Witness Better Growth In 2023

India was once on par with China in terms of GDP, but the country has gone through a rollercoaster ride that has brought its GDP down to 9.3%. However, the Indian steel industry is just beginning to awaken from a long slumber, and several factors are fueling its hunger and growth in 2023.

Factors Driving Indian Steel Demand

• Mobile Phones- India’s love affair with mobile phones is also driving the hunger for steel. The smartphone era has made commerce more accessible, and it indirectly increases India’s per capita steel consumption, which is 75 kgs, compared to the world average of 233 kgs and China’s 500+ kgs.
• COVID-19 Pandemic- The COVID-19 pandemic also plays a role in boosting steel demand in India. Two years of near-total lockdown saw small industries coming out of the shadow to procure everything from machines to scrap to finished steel products, adding to the demand for steel.
• Indian Automobile Industry- The Indian automobile industry is another significant factor contributing to the hunger for steel. With a per-car usage of 700 kgs of steel and the industry’s target of 72 vehicles per 1000 people by 2025, carmakers would demand steel in large quantities.

Government Pushing Steel Growth In 2023

• Affordable Housing- The emphasis on affordable housing by the Indian government is helping the steel sector. The recent budget’s investment of Rs 48,000 crore by the GOI on affordable housing has given the steel industry the boost it required.
• Bharatmala Project- The Bharatmala project’s push for infrastructure, which promises to connect every part of India with 83,000 KMs of highways, would also advance the nation’s steel use and production.
• Greenfield Airports- Civil aviation minister Jyotiraditya Scindia’s announcement of setting up over 200 greenfield airports by 2025, along with 33 new domestic cargo terminals and 15 new flight training schools for pilots, will also necessitate the use of large quantities of steel.
• Infrastructure- The push for infrastructure with Sagarmala, a GOI flagship project, and the Dedicated Freight Corridor, which is almost 90% complete, will also result in a substantial off-take of steel in 2023.

Insight

• The demand for Indian steel is expected to increase production by 10%-15% in 2023. The demand is not just limited to the domestic market, but news from outside is also positive. Due to the Ukraine-Russia conflict, European power crises have led to continued imports from India. ASEAN and the Persian Gulf are also showing healthy growth trends.

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