Time to invest in new steel making (long products) capacities?

The pandemic has largely impacted the demand for most industrial products worldwide. While the short-term outlook for most industrial product still remains unclear, the demand situation in the medium to long term, needs to be assessed for each industry and each product separately.

I remain extremely bullish on the prospects of steel (especially TMT bars) in the medium to long run. While the demand for TMT bars has been adversely impacted in the last 6 months, I believe, the demand over the medium to long term (next 10 years) will grow substantially. New demand of about 50 million tons per annum will get added to the current domestic demand of about 30-35 million tons. This provides an enormous opportunity for mid-sized induction-based steel producers producing steel especially through the iron ore route and using the right process (refining) technology to produce TMT bars of quality at par with the TMT bars produced through the BF-BOF route. The process route will be critical to cater to the sizable demand which, will be generated from the infrastructure segments: ports, bridges, express ways, highways, metro, railway projects etc. These applications will require high quality TMT bars not just adhering to the stringent BIS norms but actually produced through the “right” process route.       

I recommend setting up fully integrated “iron ore - sponge - induction furnace - LRF” based steel plants preferably with mini blast furnaces (hot metal for carbon adjustment and eliminating use of scrap completely) to leverage this huge opportunity over the next 10 years in the country.