Finished steel consumption (non-Alloy grade) in the country in the first eight months of the current fiscal has grown by a mere 2.3%.
This is not new as dip in manufacturing output particularly in steel intensive segments like in manufacturing of machinery and equipment, electrical machinery, transport equipment and consumer durables have expectedly impacted the mild carbon steel consumption in exhibiting a much slower growth than projected earlier.
Alloy and stainless steel, however, is having an unprecedented run, having clocked an average growth of 33% in the same period and pulling up the total steel consumption growth to around 4% during the period.
Unlike the pattern of consumption of special steel in developed countries, utensil segment provides the largest market (around 70%) for stainless steel in India. Forging sector is the major user of alloy steel, but currently passing through a lean order book as the heavy machinery sector is facing poor demand.
Industrial use of stainless steel in the country is catching on in new application areas. In airport and commercial complexes, there is a growing preference for SS variety in railings of staircases, trolleys, chairs, washrooms, partitions, support stands, show boxes and many others. Railways are going in a big way to switch over to SS wagons and coaches.
In the current year around 70-80,000 tonne of SS would be procured for this purpose. For dedicated freight corridor projects and metro rail which are expanding in nearly all the mega cities, the demand for SS would expand at a fast rate. In interior decoration in the real estate, the application of SS variety is on the rise.
The conventional markets for mild carbon steel are, therefore, facing a threat. Railways average annual consumption of mild carbon steel has been of the order of 1-1.2 million tonne in the past. SS grade would penetrate railway sector with a demand of about 1 lakh tonne to 3 lakh tonne in the next five years.
The demand for SS from the other infrastructure segments like airports, ports, telecommunication, power equipment, nuclear power, space equipment would also be growing in the coming decade.
It is apparent that the paradigm shift in the pattern of demand in specific user segments would lead to some loss of market for the mild carbon steel. Research and development in areas of corrosion, fire resistance, low volume, high strength carbon steel is much needed to explore new areas of application for mild steel. In automobile, for instance, fuel tanks are now mostly made with plastics and aluminium is finding its way by being lighter for fuel efficiency consideration.
The emerging market scenario is therefore exciting and challenging and calls for specific steps to make the products suitable to cater to the fast changing dynamics of market needs.
The author is DG, Institute of Steel Growth and Development. The views expressed are personal