India’s steel industry is expected to benefit from an election win by the National Democratic Alliance, steel market participants said.
Among the positive factors are increased government spending on infrastructure and housing. The alliance is led by the Bharatiya Janata Party, which prime minister Narendra Modi belongs to.
The earliest impact following the election will be a pickup in local steel demand. An April report to India’s cabinet had stated that low demand due to the election was one factor that depressed the finished steel product market.
“It appears from current trends that Indian voters have voted decisively for a strong government. This will ensure continuance of growth policies which augurs well for the Indian economy,” Essar Steel’s executive director Vikram Amin said.
India’s real estate and infrastructure sectors are estimated to grow to $650 billion by 2025, exceeding $850 billion by 2028 and reach $1 trillion by 2030, its government had forecasted.
“The major demand driver for steel in India in the past years has been public investment in infrastructure in roads, railways, urban infrastructure, airports, affordable housing and ports. A continuation of the rising trend in FAI in infrastructure after the election results would contribute to increasing steel demand,” Sushim Banerjee, director general of the Institute for Steel Development & Growth told S&P Global Platts.
India’s government has set a goal of achieving a steel production target of 300 million mt/year by 2030-2031. The goal is triple that of India’s crude steel production of 106.56 million mt during fiscal 2018-2019 (April-March), up 3.3% from 103.13 million mt the year before.
“With the continuance of the Modi government, no immediate change in the steel industry scenario is expected. The industry can in fact hope for further growth given the emphasis on infrastructure building, which has been a feature of the general policy framework of the previous Modi government. India will continue on the path of urbanization which will need more and more domestic steel. The prospects are promising,” Dr. Sanak Mishra, who is a member of India’s Steel Research & Technology Mission, said.
The April report to the cabinet also showed that during the meeting of Global Forum on steel excess capacity in April, the ministry of steel “reiterated its stand that India is a developing country and hence steel capacity in the country will grow as per the demand”.