MAGNUM Blog

India becomes the second-largest steel producer in the world, overtaking Japan, with a growth rate of 4.9%. India is also expected to become the world number two in steel consumption. The sector would be driven by strong government thrust for infrastructure development and housing for all. Government initiatives such as ‘Smart Cities’ and ‘Affordable Housing’ as well as building of industrial corridors will boost India’s steel demand. Rail Infra, Supply Chain Management, Heavy Engineering & Defence, Gas Pipelines etc. would also add to demand of this sector.

Transforming India into a global manufacturing hub for pharma, with sectors along the industrial and freight corridors. To set up automotive and ancillary industries to make India global hubs for manufacturing & exporting cars & Two wheelers. Further improving Steel demand as China becomes net importer of Steel. Moody’s changing “steel outlook” for all regions which include the US, Europe, Russia, Brazil and Asia to stable. Increase in price of around 3000-4000 per tonne added advantage.

• Steel-making capacity is expected to reach 300 million tonnes per annum by 2030–31.

• Crude steel production is expected to reach 255 million tonnes by 2030–31, at 85% capacity utilisation.

• Production of finished steel to reach 230 million tonnes, assuming a yield loss of 10% for conversion of crude steel to finished steel – that is, a conversion ratio of 90%.

• With 24 million tonnes of net exports, consumption is expected to reach 206 million tonnes by 2030–31. (source PWC report)

Port connectivity through the Sagarmala programme envisages port-led industrial development covering all major maritime zones in India. Oil and gas sector, the Urja Ganga Gas Pipeline Project aims to develop a 15,000-km gas pipeline network. Advance Warehousing & Logistic Hubs. National Investment and Manufacturing Zones (NIMZs) are being developed across the country, with 14 NIMZs already receiving in-principle approval. In addition, eight investment regions along the Delhi–Mumbai Industrial Corridor Project (DMIC)have also been announced as NIMZs.

Road Ahead

Overall demand visibility remains steady going forward. Industry Growth of around 4-6% can be assumed.

Government’s focus on infrastructure and restarting road projects is aiding the demand for steel. Also, further likely acceleration in rural economy and infrastructure is expected to lead to growth in demand for steel.

BENEFICIARIES : TATA STEEL, JSW STEEL, JINDAL STEEL, KALYANI STEEL, SAIL

India being one of world’s largest producers & consumers of most metals. Base Metals may outperform post H2, second half is turning positive. Demand from china have slowly started rising. The GDP in China have shown significant turnaround. Prices have seen gradual rise since July 2020. However, demand in Zinc, Nickel & Lead are still slow but demand in Copper, Aluminum, Steel are encouraging.

The ongoing recovery in economic activities is seen supporting industrial metals consumption. Stimulus packages around the globe would see base metal shinning in near term. Positive macroeconomics, liquidity surplus, and surge in demand makes metal sector buoyant.

Inflation ticking up so are the prices in metals, Prices in base metals are at multi- months high. Major players are expanding their capacities buy small or big acquisition, debottlenecking and smoother process alignment.

Through several cycles it is witnessed when the rest of the world slows, China tends to be a buyer of these commodities, and this time it’s no different. As of now, it appears that China is in the midst of a V-shaped recovery, and it’s stimulating its economy with infrastructure spending that’s positive for base metals in bulk, and is helping hold commodity prices up.

Electric Vehicles to be future of the Automobile Industry, copper & steel would play important role in this sector, Grids would require copper & Iron steel extensively. Auto Scrap Policy would add fuel to demand going further.

Road Ahead

Second wave of Covid19 may impact the demand curve, Overall cycle to remain stable and would yield returns for manufacturing units.

Growth rate at 4 to 5 %, but price rise should add to the margins going forward

BENEFICIARIES : TATA STEEL, VEDANTA, HINDALCO, JINDAL STEEL, SAIL.

The building materials industry is the second largest employer in the country. Not only does the sector employ a large number of people, but also contributes significantly to the nation’s economy. It accounts for 8% of India’s GDP and is valued at approximately $126 billion; industry reports forecast building materials to record a CAGR of 13% y-o-y to reach $750 billion by 2023. Major developments are expected in Infrastructure development sectors, Affordable Housing segment, Airport development, Port, solar park development, strengthening of logistics and warehousing segments and metro rail network expansion. hospitality, retail, entertainment, education, SEZs, FTWZs etc. have largely contributed to the growth.

The backbone for the overall economic development of the country has been our developing infrastructure market. Building infrastructure requires cement, ceramics, steel, aluminium & lot of other material materials which make the future of building material industry more promising. The launch of numerous ambitious building schemes in the recent past by the Indian government including industrial parks and corridors, smart cities, logistics networks, Housing for All 2022 scheme etc are strong contributing agents to the growth of the industry.

This will also increase the focus on industries like coal and steel, natural gas, windows, ceramics, crude oil, refinery products, fertilisers, water supply, cement, electricity and sanitation. which will, in turn, lead to the growth of the building materials. Framework for policy such as GST, RERA, Benami Act, REIT, steps to reduce approval delays Solutions for thermal proofing, water proofing, sound proofing, fire proofing, corrosion proofing, building automation including security, access regulation, climate control etc. are going to strengthen the future of the construction industry in India. The Order size would vary from project to project, the products are co-related and have demand.

Road Ahead

The major development in metros, Tier 2 & 3 cities would be visible going forward. Government spend would be key to the sector, we estimate Infra development in India is necessary and all major steps in this direction would reflect going forward.

BENEFICIARIES : SHANKARA BULIDING PRODUCTS, EVEREST IND, INDIAN HUME PIPES, ASTRAL, PRINCE PIPES, KAJARIA CERAMICS, HIL, JSW STEEL, TATA STEEL, ACC, AMBUJA

India becomes the second-largest steel producer in the world, overtaking Japan, with a growth rate of 4.9%. India is also expected to become the world number two in steel consumption. The sector would be driven by strong government thrust for infrastructure development and housing for all. Government initiatives such as ‘Smart Cities’ and ‘Affordable Housing’ as well as building of industrial corridors will boost India’s steel demand. Rail Infra, Supply Chain Management, Heavy Engineering & Defence, Gas Pipelines etc would also add to demand of this sector.

Transforming India into a global manufacturing hub for pharma, with sectors along the industrial and freight corridors. To set up automotive and ancillary industries to make India global hubs for manufacturing & exporting cars & Two wheelers.

Further improving Steel demand as China becomes net importer of Steel. Moody’s changing “steel outlook” for all regions which include the US, Europe, Russia, Brazil and Asia to stable. Increase in price of around 3000-4000 per tonne added advantage. vSteel-making capacity is expected to reach 300 million tonnes per annum by 2030–31. vCrude steel production is expected to reach 255 million tonnes by 2030–31, at 85% capacity utilisation. vProduction of finished steel to reach 230 million tonnes, assuming a yield loss of 10% for conversion of crude steel to finished steel – that is, a conversion ratio of 90%. vWith 24 million tonnes of net exports, consumption is expected to reach 206 million tonnes by 2030–31. (source PWC report)

Port connectivity through the Sagarmala programme envisages port-led industrial development covering all major maritime zones in India. Oil and gas sector, the Urja Ganga Gas Pipeline Project aims to develop a 15,000-km gas pipeline network. Advance Warehousing & Logistic Hubs. National Investment and Manufacturing Zones (NIMZs) are being developed across the country, with 14 NIMZs already receiving in-principle approval. In addition, eight investment regions along the Delhi–Mumbai Industrial Corridor Project (DMIC)have also been announced as NIMZs.

Road Ahead

Overall demand visibility remains steady going forward. Industry Growth of around 4-6% can be assumed.

Government’s focus on infrastructure and restarting road projects is aiding the demand for steel. Also, further likely acceleration in rural economy and infrastructure is expected to lead to growth in demand for steel.

BENEFICIARIES: TATA STEEL, JSW STEEL, JINDAL STEEL, KALYANI STEEL, SAIL