India’s crude steel output set to increase

India’s crude steel production is set to increase with the commissioning of JSW Steel’s 5-mtpa Dolvi plant. Production will be gradually ramped up to its optimal capacity of 5 mtpa by year-end which means at least an additional 300,000-350000 tonnes of crude steel production, going forward. NMDC has also started production in the coke oven unit at its Nagarnar Steel Plant. This plant too will add some capacity since it is expected to go onstream in 2022 with Mecon appointed to commission the same.

Q4 is usually the best period in terms of domestic demand since weather supports construction activities. Also, government infrastructure projects have deadlines to meet towards the fiscal year-end. There is demand from the automotive sector. The chip shortage is continuing but has abated and vehicle production is slated to improve.

Spiralling energy prices in Europe are forcing many mills there to temporarily reduce production. In such a scenario, importing billets is a cheaper option and may offer Indian exporters an opportunity. The Russia-Ukraine face-off will also impact natural gas supply in EU. Steel prices have risen after a correction of 6-7% in Dec’21. Mills have already raised list prices by INR 500-700/t.