Modi's building boom sets up India as global steel saviour

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India produces the vast majority of the steel it uses, but it is also being forced to import more to meet the surge in demand. Inward shipments rose 15 per cent year-on-year between April and October, to 3.1 million tonnes, according to government figures.

Local producers are becoming worried about the flood of cheap imports as demand dries up in traditional steel producers. China accounted for more than a quarter of imports in October, while some Russian steel is also reaching India, the government data show.

The quality of some of the steel coming in is “substandard,” said AK Hazra, deputy secretary general at the Indian Steel Association, which has requested authorities look into the matter. “We are just asking that imports should be at competitive and international prices and the quality should adhere to Indian standards,” he said.

Despite the strong growth, India is still well behind its rival Asian powerhouse in terms of total steel consumption. Demand for next year will be less than a seventh of China’s 914 million tonnes, according to the World Steel Association data.

How fast India can narrow the gap will depend on the success of Mr Modi’s construction roll-out and the Ministry of Finance estimates $US1.4 trillion ($2 trillion) of funding will be needed for the National Infrastructure Pipeline through 2025.

China’s real-estate problems and the lingering impact of COVID-19 will keep its steel demand suppressed next year, said Jayanta Roy, senior vice president at ICRA, the Indian unit of Moody’s Investors Service.

“Over the long term, it would depend on the recovery of the property sector on the one hand, and the government’s policy of an infrastructure-led economic growth model in China.”


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