I am quite bullish on India becoming a manufacturing powerhouse in the times to come
The Indian steel sector is a 'Bright' star especially at a time when the world outside India is reeling under a looming recession, energy crisis, high inflation and many such factors. Let's trigger the discussion with some data. India, the world's second largest crude steel producer consumed 11.4% more finished steel during April-October 2022. On a YoY basis for the same period, we consumed 65.5 million tonnes (MT).
- Pankaj Jain
CEO, Blue Ocean Steels
How is the Indian steel sector performing and how is the demand and supply scenario presently?
The Indian steel sector is a 'Bright' star especially at a time when the world outside India is reeling under a looming recession, energy crisis, high inflation and many such factors.
Let's trigger the discussion with some data. India, the world's second largest crude steel producer consumed 11.4% more finished steel during April-October 2022. On a YoY basis for the same period, we consumed 65.5 million tonnes (MT). A point to be noted here is that in the same period, the finished steel exports from India dropped 55% on a YoY basis to 4 MT as large steel mills had no other option but to hold back shipments and new order taking after the Government of India slapped a steep export tax on steel.
Coming to demand and supply in India, the finished steel production last financial year (FY 22) was approx. 120 MT whereas consumption was approx. 106 MT. This financial year, in spite of the odds at a global level, we should be able to have a minimum double-digit growth in consumption. Generally, last quarter was a good quarter, so let's hope we touch 115-117 MT of domestic consumption, and finish this year with a bang.
As the government focuses on a $5 trillion economy, what future do you see for the steel industry in the coming years?
Steel industry has always been and continues to be the backbone of modern industry. The road map to join the US$ 5 trillion economy club is all set and there is no doubt it will play an integral role in steering India towards the set target.
We are world number two in terms of steel production, but considering our population, we are still a country with one of the lowest per capita consumption of steel (just around 75 kg per person per year, which is way below the world average of 229 kg per person per year). A case in reference here is the way the Chinese steel industry grew. Just two decades back, (2000-2021) Chinese steel production was almost at the same level where India stands today. In just two decades, China surpassed 1,000 MT of steel production.
India's steel usage is everywhere - construction, automobile, railways, engineering, defence, mining, oil & gas, power, shipping, aerospace etc. Government is giving enough thrust on developing world class infrastructure and all the sectors where steel is used. I am quite bullish on India becoming a manufacturing powerhouse in the times to come. The Indian manufacturing industry is also working hard not just to meet the Indian demands but also to serve international requirements under the changing world dynamics. The road ahead is definitely full of opportunities.
Can you give in brief the activities of Blue Ocean Steels and to which sector you supply your products?
Blue Ocean Steels (BOS) is a young, dynamic and customer centric supply chain management company of steel. We deal in both long as well as flat products. Our product basket includes billets, special steels bars, wire rods, HR/CR sheets & plates, value-added products and various types of ferrous metallics. After having worked for more than three decades in the steel industry, we were completely aware of the challenges MSME industry face when it comes to steel sourcing.
Steel mills aspire for minimum order quantities with strict payment terms whereas the component manufacturing community aspires for relatively smaller quantities to be delivered just in time (as and when required in a dynamic market situation). Both situations - non-availability of steel when required or compelled to buy higher quantities than what is required, there is a challenge, and this is not a sustainable situation in business. BOS aspires to provide a solution to this problem, by becoming a reliable partner both of the steel mill and of the MSME community.
BOS aggregates the steel requirements from hundreds of small users across industries, purchases from the steel mills and keeps a huge stock of material at warehouses located in various parts of the country. The same material is supplied at the doorstep of MSME component manufacturing community. Our highly experienced and committed team, who brings in hundreds of years of industry experience, is serving requirements of more than 350 customers pan India.
Because of strong internal systems and transparent working environment, we are already in the vendor list of component makers for leading companies like Mahindra & Mahindra, SKF, Tata, Fontana Group etc. We supply to almost all the sectors where steel is used and the list includes infrastructure, automobile, defence, bearing, engineering, railways etc. In our own manner, we aspire to play the role of a catalyst for the MSME sector to become self-reliant and then contribute towards the Atma Nirbhar mission of Government of India.
How do you see the market for special steels and who are the major players in India and globally?
The market for special steels in India is still quite young and there are huge opportunities and possibilities for growth. We have made very good progress as far as steel for automotive applications are concerned; but when it comes to steel for other applications like defence, new-age railway systems (like bullet train project), mining, electronics, aerospace etc. there is a long way to go. This will also help in bringing down imports. The Government of India has recently launched the PLI Scheme for specialty steel to promote manufacturing of such steel grades within the country. It is also expected that PLI incentive shall help the Indian steel industry mature in terms of technology as well as move up the value chain.
The more one moves up the value chain, the lesser the requirements become in terms of absolute tonnage. Blue Ocean Steels is ready to partner with any OEM/component manufacturer as a supply chain link to meet the desired results.
As the world faces recession, how is the Indian steel sector placed compared to its foreign counterparts?
At present the world faces recession and the heat of recession is more pertinent in the entire Europe and some parts of the USA. We should all remember that the next recession (if at all) is triggered by inflation, not by credit excesses. Historically, most of the inflation triggered recession has been shallower and this once is also likely to be similar.
Regarding the recession in India - well, till last month i.e. October 2022, the indicators of economy like tax collections, auto sales, airline traffic etc are not at all pointing towards a major recession. Yes, it's true that we are not and cannot remain aloof from the world, but current fundamentals are strong and when we couple the same with initiatives taken by the Government, hopefully we will be resilient. Each crisis has a positive side. It's an opportunity in disguise. I am confident that we Indians will resolve this crisis by resolve with a new identity.
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