The Strategist

India's steel industry keeps booming


04/25/2017 - 14:07



JSW Steel Ltd. Has become the largest steel company in India this year, significantly increasing production, reports Bloomberg.



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pixabay
The company from Mumbai intends to build two plants with a capacity of 10 million tons each in the resource-rich states of Odishi and Jharkhand to increase capacity more than twice to 40 million tons by 2030, said Managing Director of JSW Steel Ltd. Seshagiri Rao. To finance the growth, the company will be entering the bond market and placing larger bond issues more often, possibly with a longer maturity, he said.

The steel industry of Asia's third largest economy is booming. Companies, including JSW, expect that Prime Minister Narendra Modi's plan to build cities, an industrial corridor and a freight rail network will increase demand for steel. According to the forecast of the Indian Steel Association, the volume of steel production in the country in the next decade and a half will increase more than twice, being supported by the country's growing economy and urbanization.

JSW Steel, owned by Sajjan Jindal, intends to invest 400 billion rupees ($ 6.2 billion) in each plant and is in talks to acquire land. The company also plans to participate in auctions to provide raw materials, said Seshagiri Rao.

The production capacity of JSW is currently 18 million tons. The company has a factory in Maharashtra and one in Karnataka. For the fiscal year ended March 31, JSW produced a record 15.8 million tonnes of steel.

The company, whose net debt as of December 31 amounted to 442.7 billion rupees, this month raised $ 500 million in foreign markets. The proceeds will be used to reduce the company's debt in foreign currency, Rao said.

Last fiscal year, India has become a net exporter of steel for the first time in three years, and this year the steel industry of the country also has good prospects, he added.

India is expected to outperform Japan, becoming the second largest steel producer by 2019. Factories in the country are increasing production to meet the growing demand for infrastructure, real estate and consumer goods markets. The largest steel suppliers in India are JSW Steel Ltd., Steel Authority of India Ltd. And Tata Steel Ltd. They have recorded a record volume of production last year.

The volume of production in the country will increase from 103 million this year to 110 million in 2018 and 118 million in 2019, predicts the Department of Industry, Science and Innovation of Australia.

Next year, India will be equal to Japan in terms of production volumes, after which it will outstrip Japan. By 2022, India will produce 146 million tons of steel against 118 million tons in Japan.

Domestic demand for steel grew by 3% in India to 83.9 million tonnes in the last 12 months, less than expected. Enterprises exported surpluses to benefit from the recovery of world steel prices. Import fell by 37% to 7.4 million tonnes, after the government took a number of measures to stop the influx of cheap products.

source: bloomberg.com




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