India's 2022 Steel consumption seen strong amid muted prices & infra push

by Prerna

Posted on March 19, 2022 at 12:20 PM



A report from Care Ratings says that the number of tonnes consumed in 2022 will rise from 89.3 million tonnes to 111 million tonnes. This comes after a very bad year in which consumption fell to 89.3 million tonnes. Domestic steel consumption is anticipated to expand in 2022 as a result of the government's infrastructure drive and increased demand from the building, engineering, and other industries, brokerages and rating agencies predict.

The country's consumption is predicted to increase to 111 million tonnes (mt) in calendar year 2022 (FY22), following a difficult fiscal year in which steel consumption fell to 89.3 mt, according to a recent assessment by CARE Ratings. India's steel consumption for FY21 is expected to be around 104 mt, a 17% rise over previous year. Between April and November 2021, consumption increased to 66 million tonnes, up from 55 million tonnes in the equivalent period of 2020.

The US has unveiled a $1 trillion infrastructure expenditure plan, which brokerages believe will significantly increase the country's steel consumption, hence maintaining firm steel prices in the US market. On the other hand, China, the world's largest buyer and producer of steel, has reduced exports in response to continuous output limitations aimed at reducing carbon emissions, they said. This has kept global export prices elevated.

Apart from the steel production-consumption equation, supply chain performance and logistical procedures are projected to be critical in 2022, industry officials noted.

"While businesses and countries around the world have taken steps to improve their logistics, no one knows whether what has been done is sufficient. That will become evident as we approach 2022," a senior executive of a primary steel company said on condition of anonymity.

Between fiscal years (FY) 22 and 25, the domestic market is anticipated to add around 25 mt of crude steel capacity. Approximately 7-8 million tonnes would arrive in FY22, while the remainder would take another 2-3 years to commission. As a result, while domestic demand is expected to be greater in 2022 than in prior years, brokerages expect prices to stay modestly muted. In December, the domestic hot-rolled coil price in the traders' market fell by 1% week on week to Rs 65,590 a tonne, owing primarily to weak domestic demand, particularly for flat products, according to an Edelweiss report. "In Q3FY22, we also saw increased downward pressure on domestic prices, as export realisations remained discounted and demand in Southeast Asia remained subdued due to the re-emergence of Covid cases. Additionally, the recent increase in domestic Chinese pricing generates optimism for a favourable spillover effect on the local market."

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