India reports record steel exports in FY22
Amidst a surge in global demand for steel and robust steel prices, one of the big beneficiaries has been the Indian steel sector. India produced record steel of 120 million tonne (MT) of crude steel during financial year FY22.
It may be recollected that India has already emerged as the world’s second largest steel producer after China. Other erstwhile steel manufacturing leaders like the US, Japan, South Korea and Russia rank behind India.
At 120 MT, the output for FY22 was about 18% higher compared to India’s steel output of 102 MT for FY21. Interestingly, India produced just 1MT of steel at the time of independence and has come a long way.
In the last 5 years, India edged comfortably past Japan, the US, South Korea and Russia in steel output. Of course, China still dominates with total steel output at 54% of the total global output of steel.
According to a statement by the Ministry of Steel, the total exports of steel from India were to the tune of 13.50 MT of finished value of Rs.100,000 crore. During FY22, India also imported Rs.40,000 crore of steel so the net steel exports stood at $60,000 crore.
This impressive performance by the steel sector was one of the key factors that catalysed the Indian steel sector to new highs and the total exports for FY22 to $420 billion.
However, for steel it was not the external trade but also the domestic steel production and consumption that had also registered a record high. The steel sector derives most of its demand from sectors like automobiles, engineering, white goods, construction etc.
As a result of this surge in consumption and demand, the prices of steel have been on a constant uptrend. To an extent, steel sector has passed on most of the input cost hikes to customers.
The Indian steel sector has been consistently growing at a compounded annual growth rate (CAGR) of nearly 6% on a YoY basis. One of the big boosts to steel demand has also come from the government announced Production Linked Scheme (PLI).
The idea here is to produce speciality steel in our country and not only meet our steel needs internally, but also create incentives so as to give a competitive boost to steel exports on a consistent basis.
The good news is that the demand for Steel in India has gone up substantially. At the same time there is a new challenge for steel, coming from other materials.
For instance, sectors like automobiles, white goods and railways are seriously examining alternatives to steel, without the heaviness and which is also more economical. Steel is being replaced by other materials such as composite materials, that are lighter, stronger and even cheaper.
Meanwhile, the big headwind for most steel producers has been more mundane like the rising cost of production, availability of pet coke and the regular supply of power.
The Ministry of Steel has been urging steel companies to reduce their cost of production by adopting the latest technology, but that is an issue that most of the modern steel plants are already implanting .
Steel Ministry has also urged companies to focus on exports of value added products rather than the much simpler option of exporting semi-finished steel.
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