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India’s “12th Five Year Plan” steel production capacity difficult to complete

Recently, foreign media reports, Due to the
current economic slowdown makes the steel mills in India postponed to expand
production capacity, meanwhile the Indian government delays in the approval of
new projects, will make India’s steel industry difficult to achieve previous
setting of the “12th Five Year Plan” steel capacity growth targets.

Indian government’s “Twelve Five”
(2012 – 2017) plan say that, Indian steel production capacity from the current
90 million tons increase to 142.3 million tons in 2017.

India, a securities analyst said that it is
clear that India can¡¯t achieve steel production capacity of 142 million tons of
goals in 2017. The vast majority of Indian domestic steel companies have
delayed the expansion of production capacity, estimated that India’s steel
production capacity can¡®t exceed 100 million tons to 1.05 million tons.

India’s “Twelfth Five-Year Plan”
relevant documents show that with India’s gross domestic product (GDP) to
maintain growth of 9%, steel consumption is expected to grow by 10.3%, on this
basis the 2017 Indian steel production target is set at 142.3 million tons.
India-related industry sources said that the target is indeed high, because
this data is established on sustained GDP growth of 8% in the basis. According
to Rao, India Commercial Bank chief economist introduces the next three years,
the average growth rate of India’s GDP expected to be 6%.

Due to steel construction project approval
delays, as well as environmental permit applications and other unfavorable factors
effect, India’s steel production capacity increase has emerged signs of
deceleration. According to analyst introduced, like Tata Steel, JSW Steel and
Steel Authority of India and other Indian steel companies are also facing the
problem of delays and postponement. Although India’s steel companies have
announced before the “twelfth five” increase71 million tons of steel production
capacity, however, due to the lack of project delays or regulatory permits, this
will be the uncertainty of future production capacity.

Indian steel prices may rise

Future steel prices rose mainly due to:

First, the Indian government approved a
series of infrastructure projects that will lead to rising steel demand in the
coming months.

Second, in October, the Indian state-owned
bank announced that it would cut 0.20 percent interest on the car, within three
years to buy a new car the lending rate is 10.45% -10.75%. India’s largest car
manufacturer Maruti Suzuki India has announced its October car sales rose 1.91
percent, reaching 105,087 units, and according to the analysis in the next few
months, sales will continue to rise.

Third, the Indian government has injected
140 billion rupees to state-owned banks, This will encourage banks to lend in
the coming festive season to stimulate consumers to buy cars and consumer
durables.

Finally, the Indian rainy season ends, the
new construction activity will increase.

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