India poised to take advantage of strong Middle East consumption

Thursday, 13 December 2007 11:26:55 (GMT+3)   |  
       

Speaking at the 11th Middle East Iron and Steel Conference which was held in Dubai, UAE on 9-11 December, BN Mukhopadhyay from Indian-based engineering and consultancy firm Mecon Limited discussed the ongoing strong performance of India's steel industry, the impressive levels of steel consumption in the Middle East, and the opportunities presented by the situation in the Middle East.

Mr. Mukhopadhyay began by pointing out that the Indian steel industry has been experiencing sustained growth during the last decade, with the growth rate over the last three years being spectacular at an average of 13 percent per year. In spite of this, however, in 2005 India only managed to achieve 35 kg per capita steel consumption as opposed to 250 kg for China and 216 kg for the Middle East, while the average per capita steel consumption in the world was 173 kg. Going by these figures, Mr. Mukhopadhyay said, the Indian steel industry is bound to experience substantial growth in the coming years also.

 Stating that India is the second fastest growing economy in the world after China, Mr. Mukhopadhyay said that it is likely that the present momentum will continue. Considering the current buoyancy in its economy, the Indian government is already upwardly revising its steel consumption to a level of about 180-200 million mt in 2019-20. In view of this envisaged growth, existing steel producers and other entrepreneurs are planning massive capacity expansions or additions.

Meanwhile, steel consumption in the Middle East has been particularly impressive and, in view of the boom in investments in real estate and infrastructure in the region, this trend is likely to continue in the coming years. The steel scenario in the Middle East shows a significant gap between steel consumption and steel supply. One particular characteristic of the steel sector in the region is the considerable imbalance between crude steel production and finished steel production. The significant imports of semi-finished steel products into the region also constitute an important feature. As a result, there needs to be investment in the production of crude steel (billets and blooms from gas-based DRI plants) in the Middle East. In addition to the establishment of new mills, all outstanding requirements of blooms and billets are to be met through imports, preferably from cost competitive regions like India, China and Ukraine.

Alternatively, entrepreneurs from the Middle East may decide to invest in proximity to iron ore mines in the production of pellets or semis and finished products at a port-based sites, which will allow ease of transportation to the Middle East. The pellets may then be used for gas-based direct reduction, EAF steelmaking, secondary refining and casting.

Indeed, taking the various possibilities into account, the steel industry in the Middle East would appear to be poised on the brink of a new era.


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