GROWTH OF STEEL INDUSTRY

Steel is crucial to the development of any modern economy and is considered to be the backbone of the human civilisation. The level of per capita consumption of steel is treated as one of the important indicators of socio-economic development and living standard of the people in any country. It is a product of large and technologically complex industry having strong forward and backward linkages in terms of material flow and income generation. All major industrial economies are characterised by the existence of a strong steel industry and the growth of many of these economies has been largely shaped by the strength of their steel industries in their initial stages of development.
The progress of the steel industry has a critical influence on the pace of India’s development and as such great importance is attached to capacity expansion in line with expected demand at cost and prices, which make Indian Steel internationally competitive. The new economic policies being pursued by the Government have opened up new opportunities for the expansion of the steel industry. With a view to accelerating the growth of the steel sector, the Government has initiated a number of policy measures since 1991.
The global production of crude steel declined to about 775 million tonnes in 1998 against 779 million tonnes in 1997, a decline of about 3%. The world steel consumption has also declined from 669 million tonnes in 1997 to 692 million tonnes in 1998. The international steel trade constitutes around 250 million tonnes or one-third of production. World steel industry witnessed major ups and down in the last two decades and especially over the past five years, the pattern of trade has been upset by two important developments. These are the collapse of the Soviet Union and the severe financial crisis in most of South East Asian countries, including Korea and Japan.
The Asian crisis and the collapse of USSR has transformed importers of steel into exporters. Till the recent financial crisis, the Asian countries were large importers of steel. In 1996, e.g. eight of the ten largest steel producing nations were in Asia and import by the region in the mid 1990s was around 80-90 million tonnes of finished and semi-finished steel per year which is equivalent to a third of total steel trade. After the Asian crisis, the region got transformed into a net exporter of steel.
Hence, the world steel industry is characterised by excess capacity and poor demand. This scenario led to undesirable impact on two fronts, firstly breeding protectionism within the developed countries, and secondly dumping of cheap imports. During this year Indian exports have been subjected to Anti-dumping /CVD investigations in EU, USA & Canada which eroded the export base to some extent.