Mumbai: India's steel demand is expected to rise by 4-5 per cent this year and will touch 15 per cent CAGR after FY17 as the country has the potential to emerge as the second largest steel consuming market after China during FY15-20, Deutsche Bank said in its research report.
With expectations of the new government's thrust on jump starting stalled projects initially followed by pushing large flagship projects, including the freight and industrial corridors, it is expected that India will begin moving back on the path of materials intensive growth by the end of this year.
"We expect steel demand to rise by 4-5 per cent this year as against average of 2 per cent over FY13-14, 8 per cent in FY16 and a 15 per cent CAGR after FY17 when policy initiatives of the new government begin to impact materials demand, meaningfully. "Based on our growth forecasts, India has the potential to emerge as the second largest steel consuming market, behind China during FY15-20," the report said.
The report expects that India will emerge as a large importer of steel particularly in FY19-20 with the imports of as much as 24 million tonne of steel - equivalent to 17 per cent of its consumption. The domestic steel production is estimated to rise by 48 per cent by 2020, it said. "We also estimate India's iron ore requirements to rise by 53 per cent and coking coal requirements by 39 per cent by 2020," the report said.
India is likely to import 15.5 million tonne of iron ore - its highest ever imports - in FY15. "We do not see a risk to India's iron ore self sufficiency on a longer term basis and country is likely to import 15.5 million tonne of iron ore - its highest ever imports - in FY15. "However, this remains contingent on easing of regulatory restrictions. A timely resolution can support domestic supply ramp up to meet demand from new steel capacities between now and 2020, it said.
