The Great Steel Shake-Out

Life post-NCLT

- Madhumita Mookerji

When people in the know of things look up at the global steel firmament, they say they see 2 stars shining bright. One is South East Asia and, the second, is, hold your breath, India. But how can that be, sceptics ask, with the kind of challenges this country’s steel industry is grappling with? What about its raw material issues? Cancellations of or issues in iron ore and coal mine allocations? Delays in land acquisition and obtaining environmental clearances? Increased logistics and raw material costs and higher operating cost for companies?

Does the very introduction leave a bitter taste in the mouth?

Well, we can silence the sceptics by saying the pros truly outweigh the cons in this argument. As said Dr Edwin Basson, the Director General of the World Steel Association, “We think that India will be the undoubted star in terms of steel demand growth. We forecast an increase of 5.5 percent this year (2018) and a further 6.0 percent in 2019, so there are clearly good prospects in India and in South-East Asia too. These are the two bright spots we see in the next few years. However, we should be clear that in India there are several bottlenecks on the production side that have to do with land use or steel market development or logistics issues, but these are normal for a developing economy at this phase in its growth.”

Sounds quite comforting, doesn’t it?

While we march towards 2030, the entire steel landscape is about to change from which will sprout the 300 million tons that the government has targeted. From this consolidated terrain, only a few last mills will stand tall to meet demand to take the country’s infrastructure forward. Yes, we are talking of the post-NCLT scenario. Industry experts stress that going forward, a few key players will jointly dominate the steel sector.