India will add 100 mt of steel demand in 7 years: Jayant Acharya, Joint Managing Director, JSW Steel

The geopolitical developments in West Asia need to be watched in the short term. However, it is not going to impact Indian businesses directly, though there could be some impact on the export of steel to those countries in the short term. Though war is not good, if you look at the Ukrainian-Russia conflict as well, a lot of steel was required to rebuild those economies. The domestic consumption of steel in Europe and Russia will increase. Similarly, West Asia will also need a lot of steel for rebuilding.

India’s steel exports to these countries is limited. In the last quarter, exports fell due to strong domestic demand. Despite the September quarter being weak on demand traditionally, we received good demand and had to reduce exports. Having said that, our dependence on West Asia for exports is low. Even in the last quarter, it was below 8 per cent. The industry exported one lakh tonnes last quarter. In spite of reducing exports, JSW Steel has liquidated 3 lakh tonnes of inventory. This shows that the domestic market is strong, and can strategically rebalance exports.

While exports have fallen, some imports have gone up, which we need to watch. This is because domestic demand is good. Structurally, India registered 20.8 per cent growth in the first half, and we will add incrementally. I believe it will be double-digit growth for the steel industry this fiscal because, structurally, the country is in a nation-building phase, so the GDP-to-steel ratio will be high. Last year, it was 1.8 per cent. This year we have already seen over two per cent growth in the first half. Even if we register 6.5 per cent GDP growth, we will register incremental steel demand of 10-12 million tonnes on a larger base. We will add 100 mt of steel demand in the next seven years. We need at least 120 mt of additional capacity to meet the growing demand. India is in a high growth trajectory, where Japan was during their nation-building phase of the 1950s and 1960s, when they grew by 14 per cent. Similarly, Korea and China, during their nation-building phase, grew by 13 per cent and 11 per cent. They have all had 20 years of nation-building phase. I believe India is in that kind of growth phase.

It is premature to discuss this. We are looking at strategic coking coal assets and Tech Resources was one of them. We are in discussions. There is nothing concrete to say. We do not think that the Canada stand-off will influence the long-term business decision. We are just discussing right now.

We need to conserve our mineral resources to add value here. It should be used to create jobs in our own country. We need to use domestic iron ore for producing steel and then engineering goods here, which will create more jobs, besides boosting the overall economy. We have to be cognisant of the Prime Minister’s vision to promote Make in India. Import of steel should be restricted because there have been instances of predatory pricing. India is vulnerable to imports due to lack of trade measures to ensure that unfair trade is not diverted to India. We have export duty on iron ore of 58 per cent grade. So grades below 58 per cent iron content can be exported duty-free. I am sure the government will take action if export of below 58 per cent grade increases beyond a point.

I am not aware of the context in which this statement was made. There is really no price cartelisation in the industry. If it is true, margins will not be so strained. The first nine months of the last financial year were challenging for all steel companies. People think that the industry makes its margin to make up for the growth capital possible, but let us also understand that if as a country we need to progress, the steel industry has to make these investments. At the end of the day, investments have to generate returns which can be ploughed back in the future. I think, the industry is investing profits made earlier. If there is a cartel, can domestic steel prices be so low.