The steel demand in most of the parts in the world is sluggish for quite some time. Even the countries like China and India, which were not affected by the global meltdown, are now witnessing a weak steel market. The prime reason for this is that the user industries like infrastructure, automobile are not growing as per the expectations. In other words the production levels have rose substantially in view of the future rise in the consumption but it was not to be. Except MENA region, most of the world is facing either a slowdown or stagnation in steel consumption. Of course in India the problems do not end here. There are other issues like environment, land acquisition etc. which are very vital and have the potential to delay any project for an indefinite period. In fact if you see, not many green field steel projects have come up in India in last few years. There is a limit to which one can have brown field expansion but what will happen after that? How can Indian mills cater to the rising steel demand in the country? Will India be a long term net importer? Only time will answer all these questions!
The recently concluded ‘Indo – Arab Steel Summit’ was in a way an eye opener for many. We all know that UAE is the biggest trade partner for India and even for steel, it is an important destination. The Middle East region being a net importer of steel, offers a tremendous potential for steel exports but mind well, it’s not a cake walk. There are other players like Turkey, CIS, China which are very active in this region for many years. Also there are certain certifications needed in order to sell in this market. Further, the market needs a seamless and a long term supplier, not an opportunistic one. Today, due to weak domestic market, many Indian mills want to export to Middle East but they will have to take a matured view and continue the supplies to this region even if the domestic market improves.
I am sure a multi product and multi dimensional Indo-Arab steel trade will flourish in coming years and will be beneficial to both the regions.