India is currently the 4th largest producer of crude steel in the world. She is slated to become the second largest by the year 2016 and by the year 2020, her steel making capacities are expected to grow exponentially, taking her way beyond the 220 million ton mark by 2021-22. 193 MOUís for Greenfield projects involving a total outlay of INR 5140 billion is already in place which is expected to be further bolstered once the global economy shrugs off the ill effects of the meltdown.
The per capita consumption of finished steel products in India has increased at a CAGR rate of 7.8% to 51.7 kgs in 2010 from 36.6 kgs in 2005, showing the kind of growth trajectory that the industry has chalked out in the immediate past. However, this is still woefully small in comparison to the world average of 202.7 kgs and virtually insignificant when compared to developed economies like USA (258.2 kgs) and Germany (440.8 kgs), pointing at the huge scope that remains in the segment.
Based on the data provided by the Planning Commission of India, India is producing 73 million tons per annum ( 2011-12). Our steel production is stated to increase to 220 million tons in the next 5-6 years. This means additional steel making capacity of 148 million tons will be built. If 70% of the new capacity is produced through blast furnace route, additional 104 million tons of steel production will require additional 65 million tons of met coke supplies.
Another fact that needs elucidation is that while the primary driver of demand for coke is, and will continue to remain, the steel industry, there is also a thriving demand from segments like foundries, soda ash and other chemical units, etc. something that is not considered while compiling the demand for coal and coke.
Hence the critical point is that coking coal and coke will continue to be in short supply in the foreseeable future and there will be a huge opportunity in front of key players like Global Coke.
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