Global steel figures recently released by the World Steel Association have one important data concerning True Steel Use numbers during 2005 to 2011 for a few representative countries. In the Indian context, we are exposed to the term ?real steel use? as opposed to apparent steel use, by defining the former as ASU plus net of double counting.
The official statistics compiled by JPC attempt to clean the apparent consumption series by taking out HR coils used by standalone cold rolling mills, CR coils used by standalone galvanised units, and HR coils/plates used by standalone pipe manufacturing units. It is not known if JPC also corrects the category-wise import figures by taking out from the mother category quantities used for production of downstream categories to arrive at the real consumption series. One major improvement that JPC can make in its data preparation is to indicate separately the category-wise real consumption series instead of deducting the total estimated quantity of flat products under the head of double counting from apparent consumption of flats. The non-availability of category-wise break-up of real consumption series gives an erroneous assessment of the total market of HR and plate, a part of which would be dried up once backward integration is undertaken by the downstream units. Most of the other countries have accomplished this task.
Coming back to the improvement in data collection by WSA, the True Steel Use figures reported by them refer to real consumption (net of double counting as per JPC) plus net of indirect trade in steel. As mentioned earlier in this column, the indirect trade in steel indicates export and import of equipment containing steel as a major input. Based on an average norm of consumption of steel per unit of machinery and equipment involved in international trade, it is possible to work out the indirect export and import of steel by each steel producing country. For instance, in the automobile sector, a large group of machines and parts made of steel are imported in CKD, SKD conditions and assembled in India. While it would not appear in the direct list of steel imports and therefore would not be a part of apparent steel consumption series of JPC, the country has actually consumed this much volume of steel in the form of imported items. WSA feels that an assessment of indirect trading in steel should also be assessed in order to arrive at the true steel use potential of a country. And this perception is correct specifically for those countries accounting for a reasonably good volume of trade in equipment. India?s apparent steel use in 2011 stands at 69.8 million tonne. WSA estimates indirect trade in steel by India reached 1.4 million tonne in that year, and hence the true steel use by India in 2011 should be placed at 68.4 million tonne. But for China, which is the most prominent exporter of equipment, the apparent steel use at 634.3 million tonne in 2011 as reported earlier by WSA now stands corrected to 576.6 million tonne as true steel use, lower by 57.7 million tonne that goes out of China in the form of net exports of equipment. For India, ASU exceeds TSU only marginally and hence highlights the enormous potential of steel consumption in the country in the coming years.
The author is DG, Institute for Steel Development and Growth. The views expressed are personal