The steel demand is poised to log a compound annual growth rate (CAGR) of around 7-7.5 percent between the fiscals 2021-22 and 2024-25, said ISA Secretary-General Bhaskar Chatterjee said in the Indian Steel Markets Conference 2021 organised by mjunction.
Sharing his outlook for the sector, he said the industry has been able to brave the headwinds caused by the COVID-19 pandemic to a large extent.
The Secretary-General shared how managing logistics requirements was still challenging and costly for many steel makers in India.
He also stressed on how there is an urgent need to increase and improve the logistics arrangement for the domestic steel sector.
Managing logistics requirements is still challenging and costly for many steel makers in India, ISA Secretary-General Bhaskar Chatterjee.
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Noting that the steel production and consumption of the metal are expected to grow on the back of government initiatives, the transportation of raw materials to steel mills and finished steel to demand centres is an area that demands attention.
Citing a figure from a government study, Chatterjee said, “The freight cost from Jamshedpur to Mumbai can be as high as USD 50 per tonne in comparison to USD 34 per tonne from Rotterdam to Mumbai.”
Mr Chatterjee said that in India, for every 1 tonne of steel produced, roughly 3 tonnes of raw material needs to be transported.
So, even as India doubles its steel production in the next 10 years, the logistic requirement of the domestic steel industry will become virtually unmanageable unless steps are taken to improve the physical infrastructure especially by the Indian Railways, he shared.
The government has set a target to increase India’s total installed steel capacity to 300 million tonne by 2030.
Managing logistic requirements is still challenging and costly for many steel makers in the country, he underlined.
The primary raw materials iron ore and coal are bulky and so is the product steel, and the process of transporting the raw materials to steel mills or finished steel to demand centres is always painstaking.
In addition to that, most Indian steel plants are located inland unlike in China, Japan or South Korea where they are located closely to the sea.
“This system makes the logistic requirement more taxing, although railways are the naturally preferred mode of transportation for steel and meet more than 80 pc of the total logistical requirement of the steel industry.”
“There are a number of infrastructure constraints in the railways logistical ecosystem which adds to the logistical woes of Indian steel makers,” Chatterjee said.
The government’s initiative related to housing like Housing for All, Bharatmala project for roads, Sagarmala project for ports, Dedicated Freight Corridors, metros, thez321 bullet train under the Railways, and UDAN under the aviation sector will provide great impetus.
Also, he shared that mandatory road crash barriers on national highways, rising construction projects, use of pre-engineered buildings and design changing in urban housing will boost the steel demand in the long-term.