India's crude steel production expected to touch 124 mn t in CY'22: ISA

As per the ISA's own projections, crude steel production is estimated at 124-125 million tonnes (mn t) by end-CY'22, Alok Sahay, Secretary General and Executive Head of the Indian Steel Association (ISA) told SteelMint in an exclusive interview.

He further informed that India's finished steel demand will be up by around 16.7% to reach around 104 mn t by end-CY'21 and touch 111 mn t by end-CY'22.

"We expect crude steel production to be around 120-122 million tonnes in CY'21. Net exports (exports minus imports) of semis will be around 4.5-5 mn t this calendar year and an additional net export of finished steel of around 7-7.5 mn t," Sahay forecasted.

"Demand is sluggish but our projections are on course - because a number of infra projects are in the pipeline and with the government's emphasis on close project monitoring, the construction sector will drive steel demand growth," he emphasised.

Chip shortage impact

The normal projection is that the chip shortage should get over by the first half of CY22.

The Indian steel industry is exploring alternate places where the value chain is getting plugged without being overtly dependent on China, he observed.

"We feel, the chip shortage should get over by the middle of next year or at best take a few more months," Sahay said.

He added that, in terms of its effect on demand, car production has fallen by 10-15% in India. The auto sector accounts for around 10% of steel demand, which would amount to around 1-2 mn t of lower demand than in a business-as-usual scenario.

Iron ore prices outlook

Iron ore prices internationally have been correcting and are expected to be in the range of $95-110/t in the medium term. "Prices have weakened and would weaken further. As China's iron ore consumption becomes normal, iron ore prices will also attain normalcy," Sahay stressed.

Steel prices and raw material costs have shot up over the last one year, which is not normal. But now things are normalising, including iron ore prices, China's demand and consumption, hot metal output and even freight rates.

Dwelling on India's iron ore prices, Sahay said NMDC's iron ore lumps prices have come down by 22% from Jun'21 to Oct'21 and fines are down 27% in the same period. Prices are now expected to stabilise.

The pandemic has increased uncertainty. Risk can be factored into a business model but not uncertainty. Therefore, the scenario is volatile. The abnormality seen in the last one year is also because uncertainty could not be priced in by most markets.

Outlook

The Indian Steel Association does not see much crude steel being exported in CY'22 in the form of billets, which went to China this year.

Once the uncertainty decreases, normalcy will return faster. There will likely be more clarity by end of winter, Sahay said.