STEELWORLD – November 2022

Editorial – November 2022

 

‘Customer is the most important guest in your premises’ is a very famous statement and is seen being displayed in many shops around. Such is the importance of ‘customer’ or if one sees this in the context of industry, such is the importance of ‘demand’. Yes, if demand is there everything else can be managed, created, isn’t it !

The global iron & steel industry today is caught in a delicate situation. The US has already started showing signs of recession. May be in the next few months it will be officially announced. European economy is stagnated since many years and whatever demand is remaining, energy / gas scarcity will further erode it. I am afraid, European countries (barring few exceptions like Germany, France) will also enter a long recession in few months from now. After the real estate bubble burst in China, their economy is far from healthy. Their growth projections have already been slashed down drastically by ADB and other global bodies. In all likelihood, their exports as well as the domestic demand will suffer a jolt. Many of the Middle East region countries are actually the satellite economies of the US and the western world and move up and down in tune with them. Also the IUI (infrastructure Utilization Index) being very low in the region, there is a limit to the developmental activity and thus is not expected to contribute much to the global steel demand in next few years. Africa is still not fully awake and the steel demand in most of the countries is insignificant. Where does all this leave us ?

Where is the economy and the steel demand growing ? The answer is undoubtedly ‘India’. Yes, it is. Firstly, the continuous and sizable domestic demand has protected India from entering into recession. Whatever happens in the rest of the world, the country as big as 135 crores population and boasting of the biggest middle class in the world can not be short of demand. Secondly, as its IUI is very high, one can expect a huge and sustained developmental activity here which will ensure steel demand curve heading north. Further the governments, centre as well as the state, are giving a great emphasis to the infrastructure development.

All this is not only hallow theory. We are seeing it happening on the ground. The user industries like construction and auto are manifesting robust growth. All the major steel business houses are implementing very big expansion plans. Domestic steel production climbing up and still the imports are on the rise. Such strong is the steel demand push !

In my opinion this is the time to take a bit extra risk and bait your money on Indian economy and steel sector ! What say you ?

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