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India Plans to Produce 120 Million Tones of Steel by 2012
Jun 11, 2010

India’s steel production capacity is expected to rise to 120 Million tones by 2012 on the back of expansion plans of major national and international players.

According to the Indian Steel Minister Mr. Virbhadra Singh, the steel production capacity of India will climb to 120 Million Tones by 2012, as reported by SteelGuru.

The steel production in India (the world’s fifth-largest steel producing nation) surged to 4.2% to 60 Million Tones at the end of March 2010. The Minister further added that the steel industry would touch the set target for 2012 no matter whether 1.5 Lakh-crore Posco and ArcelorMittal projects complete or not.

The main reason for the prospective rise in steel output is the expansion plans of production capacities by many steel companies. Moreover, major steel producers Jindal Steel, Tata Steel, JSW, Bhushan Steel and Essar Steel and several secondary steel producers are coming up with new capacity expansion plans.

Besides, the public sector companies SAIL and RINL have been expanding their existing plants at Visakhapatnam, Bokaro, Durgapur and Bhilai by investing around Rs. 80,000 Crore. The government has revealed that majority of the expansion works will be finished by 2011-12. Hence, the expansion plans will result in the improvement of public sector production capacity, which will become almost double of present level.

According to a recent market research report “Indian Steel Industry Outlook to 2012” by RNCOS, demand for steel has been continuously increasing in the country. Strong domestic demand leads to rise of 23% steel imports to 7.2 Million tones during 2009-10. Moreover, the government plans to invest in the infrastructure sector will help in boosting the domestic steel demand in 2010. The consumption of apparent steel production will surge at a CAGR of 8.3% from 2009-10 to 2012-13.

However, the steel producers are facing many challenges. The steel producers have expressed their concerns over the inflating iron ore prices that might get doubled in the next few months. The main reason for the high prices is the National Mineral Development Corporation (NMDC), the country’s largest miner, plans to raise prices.

As per a Senior Research Analyst at RNCOS, “India is a fast emerging steel producer. The country also represents the world’s one of the lowest cost steel producers that makes it an attractive destination for new steel projects investments. The investments by global producers such as POSCO, which has disclosed plan of setting up a steel production plant at a cost of Rs 32,300 Crore in Karnataka, will give fillip to the steel sector.”

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