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Makers of ferrochrome, a key alloy used in making stainless steel, are planning expansion of their facilities to gear up for an expected increase in domestic demand instead of focusing mainly on exports to China that account for more than half of their annual production.
The Narendra Modi-led NDA government's focus on building infrastructure and spurring domestic consumption holds promise of increased demand of stainless steel from consumer durables, auto, transport, water management and solar energy sectors.
"The steel industry grows at 1.2-1.3 times the GDP. With a strong Prime Minister and the new government's initiatives, the demand of stainless steel can be expected to grow around 8%. The industry is focusing on architecture, shopping complexes, institutional buildings, auto sector and railways for growth," NC Mathur, president of Indian Stainless Steel Development Association (ISSDA) told ET.
Indian ferrochrome makers are currently dependent on China, the world's largest maker of stainless steel, which is also the biggest importer of Indian ferrochrome as it buys over half of the country's annual output of one million tonne.
"All this is going to change in the next three-five years because stainless steel is starting to pick up significantly and in many commodities there is a lag before demand can be met. In ferrochrome industry, we are talking about adding capacity. We see production going up to 1.5 million tonnes in the next three-five years," said Subhrakant Panda, MD of Indian Metals & Ferro Alloys (IMFA).
Besides IMFA, India's key ferrochrome makers include Tata Steel, Ferro Alloys Corporation (FACOR), Visa Steel and Jindal Stainless.
IMFA, which produces about a fifth of the ferrochrome made in India, plans to operate all its furnaces by December to increase its production to 275,000 million tonnes on an annualised basis from 200,000 million tonnes. Panda added that his company is also looking at further expanding its capacity, which will take about three years.
The stainless steel industry has been battling a slowdown in the past few years, with production stagnant over the past one year at 2.5 million tonnes, which is half the available production capacity.
According to ISSDA president Mathur, the industry is not only banking on higher economic growth over the next five years but also on initiatives such as Swachh Bharat, 100 Smart cities and overseas investment as Modi has sells the India growth story to the world.
Although India is the world's third largest producer of ferrochrome, over half of Indian produce is exported to China since domestic demand for stainless steel has remained low.
Jindal Stainless, which has a small chrome ore mine in Odisha, has been waiting for allocation of more mines. "The whole idea of coming to Odisha was chrome ore mines. We have signed a few MoUs with the state government for chrome mines and are waiting for delivery on that," said Rohit Raina, head of corporate affairs and communication at Jindal Stainless.
Other companies have also pointed out similar issues that need to be remedied to aid expansion. According to them, the mining problems that have inflicted coal and iron ore have hit this industry too. Ashish Saraf, joint MD of FACOR said, "The government can certainly provide a boost to stainless steel demand through a policy initiative. However, mining issues, including mine renewal leases need to be sorted out."
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- [Editor:sunzhichao]
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