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Global excess capacity behind drop in Indian steel exports - Mr Sushim Banerjee-The 20th China (Guangzhou)Int’l Fastener & Equipment Exhibition
9/19/2018 紧固件展-紧固件采购会-国际紧固件展-fastener expo |
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Mr Sushim Banerjee DG of INSDAG in his personal capacity wrote in Financial Express industrial production figures for the month of July just available from CSO indicates a growth of 6.6% contributed by a 7% growth each in Manufacturing (wt: 77.6) and Electricity generation (wt: 7.99). The growth of manufacturing of fabricated metal products at 10.4%, electrical equipments at 7.9%, motor vehicles and trailers at 14.1% out of which commercial vehicles at 28.1%, other transport (wagon, coaches, ships) at 18.9% and furniture at 42.7% are the segments that have maintained a more than moderate growth rate during the month. Among the steel products, mention may be made of SS Utensils growing at a staggering 76.2% followed by production growth of Alloy/SS Bars and Rods at 23.4%.
The major drivers of steel consumption, namely, infrastructure and construction and automobile are playing their cards quite well to push up the consumption level. The infrastructure/construction goods segment has moved up by 8.4% in the month. The consumer durable segment, however, notched up a monthly growth of (- )1.5% which has pulled down the average growth of the segment from 14.4% last year to 9.4% in the current period. In the overall analysis the IIP is playing a positive role in providing an enabling environment for growth in steel demand.
It is interesting to note that in the aftermath of global steel price rise since H2 of last year contributed by revival of investment as a stimulus measure and growth of market sentiments in US, EU and South East Asia, the issue of surplus capacity in steel was pushed to the background from the centre stage it occupied till H1 of 2017.
The just released OECD report on current status of steel capacity reveals that since 2013 till 2017, the global steel making capacity has observed a deceleration and went down by 1.3% in 2017 to reach 2251.2 million tonne. This may be compared to 1689 MT of global production of crude steel as reported by WSA which indicates a 75% capacity utilisation.
Arithmatically the excess capacity by 2017 thus works out to be 562.2 million tonne. The country wise estimates on proposed investments show that approximately 52 million tonne of steel capacity additions are underway and may come on stream by 2020 and another 39 million tonne of steel making capacity is in the planning stage.
The West Asia region would be accounting for the maximum capacity additions (23.0 million tonne) with Iran leading the group. It would be followed by Asia (18.7 million tonne capacity additions), Africa (5.9 MT), CIS (2.9 million tonne) and Latin America (1.6 million tonne) with Brazil and Argentina leading the group. Thus in the absence of any further closures, the global steel capacity is slated to reach 2342.2 million tonne by 2020. In case the volumes underway and planned are added, Asia would lead the region with an estimated capacity additions of 43 million tonne followed by West Asia with 32 million tonne of additional steel capacity by 2020. The excess capacity syndrome, the report concludes, would continue to plague the global steel industry in the coming years.
The report acknowledges that the data have been collected from publicly available and commercial sources whose veracity could not be checked. Accordingly, China has reportedly enhanced its capacity to 1150.1 million tonne in 2015 which has subsequently come down to 1047.9 million tonne in 2017 due to closure of steel capacities to the tune of 102.2 million tonne during the last 2 years and is still continuing. As regards India, the steel making capacity by 2017 has been put at 124.8 million tonne (as against Installed capacity by March 31, 2018 shown at 138 million tonne by JPC).
Some of the projected investments shown for capacity creation of steel making in India are not yet substantiated by firm estimates. Some of these are: Greenfield project at Chattisgarh by Tata steel (5 million tonne), Essar steel at Paradip (6million tonne ), Sesa Sterlite at Ballari (4million tonne ), SAIL/NMDC JV at Chattisgarh(6million tonne ), Uttam Steel and Power at Panjim (1.550 million tonne), Uttam Galva at Wardha (1million tonne ), NMDC/OMC JV at Odisha(12million tonne ), POSCO at Odisha (12 million tonne), JSW at WB (10 million tonne ).
As land acquisition and environmental clearance process delay the commencement of new capacities in India, it would be the brown field creation of capacities by existing steel plants like SAIL at 5 locations, RINL, Tata steel at Kalinganagar and Jharsugoda (erstwhile Bhusan steel), JSW at Dovi and Bellary, JSPL at Angul, Patratu and Raigarh and Essar steel at Hazira and NMDC at Nagarnar that should be given the maximum thrusts.
Subject to the sustenance of market growth, the green field projects by Arcelor Mittal, JSW, Tata steel and POSCO by 2030 may also be considered. The sourcing and prices of major inputs like iron ore and coking coal along with ability to beneficiate the inputs for upgradation, the setting up of more coal washeries, substantially higher Pelletisation and less energy consuming technologies would pave the ground for more FDI and encourage private corporate investment in steel sector.
紧固件展-2019第二十届广州国际紧固件及设备展览会-巨浪展览
-The 20th China (Guangzhou)Int’l Fastener & Equipment Exhibition
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