A weak steel market could delay a Posco decision on investing in a steel plant in India.
G H Bang, managing director of all Posco units in India said that “The Indian steel
market is very weak and is most likely to face oversupply in the near future. So, we are
not sure whether we will be able to make money if we invest in an upstream project. This
is not the right time”.
India will be adding 20 million tonnes of annual capacity in the next five years. Most of
this would be via expansion of existing units, which has a cost advantage over a new
Posco had signed a memorandum of understanding in 2005 to set up a 12-mt plant near
Paradip in Odisha with an investment of Rs 52,000 crore in what was pegged to be
India’s largest foreign direct investment (FDI). The project did not take off, largely due to
a struggle against land acquisition, as also uncertainty over captive iron ore mines.
Posco has invested Rs 8,000 crore in a downstream unit in Maharashtra.
The economy’s six-year low in growth of gross domestic product for the financial year’s
first quarter (Q1, April-June) is in line with the weak performance of the capital
goods and cement sectors. Demand is unlikely to return in the September quarter, said
“Overall for the industry, the June quarter was a bad one. No major contracts were
awarded, and it is not going to improve in the immediate future. Barring the government
contracts, investment sentiment remains weak,” said M S Unnikrishnan, managing
director (MD), Thermax.
Industry officials peg capacity utilisation for the capital goods sector at 50-60%,
compared to 70-80% a year before. The trend is similar for cement. Industry volume
declined in the June quarter, after six quarters of double-digit growth. Capacity utilisation
fell to 67% in the quarter, from 75% in January-March.
The Bangladesh Export Promotion Bureau (EPB) has set an export target for cement industry
at US$10.50m for financial year 2019-20 (July 2019-June 2020) compared to US$14m,
earmarked for the previous fiscal year. This target has been revised downward by 25%, due
to growing demand in the country as well as competition. The number of big construction
projects and GDP of Bangladesh are constantly growing, thus government has changed the
target, industry observed.
The overall output of large-scale manufacturing industries (LSMIs) decreased by 3.6% for
July 2018-June 2019 compared to the year-ago period, according to the Pakistan Federal
Bureau of Statistics. The drop in output has also impacted cement production during this
Pakistan’s cement industry has recorded a three per cent YoY fall in production during the
FY18-19 from 41.14Mt to 39.92Mt, reportedly due to a drop in local demand amongst other
Ruchika Chaudhry Govil, Joint Secretary Ministry of Steel, talked on the importance of using
LD slag. At a conference organised by FICCI on ‘Promoting Awareness and Usage of Iron &
Steel Slag – Ushering in a New Era’, she said that the government will facilitate experience
LD slag, a by-product of a steel making process, is not being used in India unlike the blast
furnace slag, which is being commercially used in several applications, mainly by cement
“LD slag has posed a problem for us as it is not being used at all. The LD slag has been
accumulating over the years,” she added, urging the industry to highlight the stumbling blocks
and submit their comments invited by a task force constituted to identify usage of slag in the
next two weeks.
The widening gap between toll collection and interest outgo is limiting the ability of National
Highways Authority of India (NHAI) to expand the national highway network in India by
leveraging its balance sheet further.