Steel mills in India are set to churn out metal at a rapid pace over the next decade-and-a-half, with output forecast to more than double, bolstered by a growing economy and increasing urbanization, the Indian Steel Association said, driving shares of producers to rise.
Production is set to climb 10 percent to 12 percent in the year that began this month, from a record of 101.3 million tonnes in the past 12 months, and is forecast to advance to 240 million tonnes by 2031, association secretary-general Sanak Mishra said by telephone in New Delhi.
Consumption is expected to expand by more than 5 percent this year from 83.9 million tonnes, he said.
India is to surpass Japan as the world’s second-largest steel producer, behind only China, by the end of the year as mills increase capacity to meet growing demand and fill the gap left by slumping imports, Mishra said.
The country’s top suppliers — JSW Steel Ltd, Steel Authority of India Ltd and Tata Steel Ltd — all ended with record output last year and double-digit gains in their shares, beating the benchmark.
“Steel is a growth story in India for the next several decades. The country is moving rapidly toward a phase of urbanization,” Mishra said.
“If the economy grows at more than 7 percent for the next five years, and that is the consensus, then we will see a healthy growth in the Indian steel industry,” he added.
The government has earmarked large spending on infrastructure and construction in the current financial year and that is a positive factor, as it is the biggest consumer of steel in the nation, he said.
China’s output in 2015 was 804 million tonnes, followed by Japan at 105 million tonnes and India at 89 million tonnes, the World Steel Association said.
A projection from the Australian government earlier this month had India’s output drawing level with Japan next year and overtaking it the year after.
Shares of top producer JSW Steel rose as much as 2.3 percent in Mumbai, India, extending this year’s gain to 20 percent.
Steel Authority of India jumped by as much as 2.4 percent and Tata Steel advanced by as much as 2.6 percent, while the benchmark S&P BSE SENSEX climbed by as much as 1 percent.
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