India?s elevation as a number two in the world from the latest rank of fourth in terms of crude steel production by 2013 seems to be a likely scenario. Even assuming that the present recessionary trend continues in the West as well as in Japan and Russia, which would discourage any fresh steelmaking capacity to emerge in these countries, the capacity augmentation efforts in India would also not be a smooth affair. As per the available indications, India is likely to add 10-12 million tonne capacity by 2012 and another 10-12 million tonne, thus making a total of 98-102 million tonne by 2013. However, demand from major consuming segments like construction and other manufacturing and processing industries is rather subdued.

In addition, the latest mining Bill and land acquisition Bill have already sensitised the steel producers to an extent which can hardly be termed as investor friendly. Thus it would not be surprising if the slated capacity addition exercise is spilled over by another year or two, in which case the installed capacity by 2013 would be lower than projected.

It may be recalled that in 2010, Japan actually produced 110 million tonne of crude steel. During the first eight months of 2011, Japan has produced more than 72 million tonne against India?s 48 million tonne. By 2013, Japan has projected a production level of 110 million tonne of crude steel. Although domestic consumption in Japan would continue to be lower than 70 million tonne in the next few years, Japan would strive to become a major exporter of steel products to the tune of nearly 40 million tonne by 2013. Plants in US could produce 81 million tonne of crude steel, which was merely 77% of total capacity in 2010.

The available indications suggest that US would achieve a crude steel capacity of more than 110 million tonne by 2013. It appears that subdued domestic market is not a deterrent to higher capacity utilisation of crude steel in Japan and US as both may emerge to become large exporters This makes India?s target of becoming number two a bit more challenging.

The author is DG, Institute of Steel Growth and Development. The views expressed are personal