Steel "The Century Debate" China VS India

When Baosteel and Wuhan Iron and Steel, the two major steel companies in China, failed to obtain full approval for the construction of the coastal fine steel base, and the neighboring country's Indian steel industry is actively expanding its production capacity. According to relevant statistics, India’s steel output has doubled over the past eight years to reach an annual output of 70 million tons. The relevant agencies even used the “Great Leap Forward” to describe the development of the Indian steel industry in the past few years. This has to make people worry suddenly: Will India be the next "China"?

Although the Indian government has not put forward targets such as “modernization” for the steel industry, the Indian steel industry has taken advantage of its own advantages: strong domestic demand, low iron ore prices, cheap labor, and rich local coal resources. "Development will closely link the upstream rich resources with the downstream steel companies.

This is exactly what the Chinese steel industry does not currently have. For example, iron ore demand in China and India are very different. The supply of iron ore in China is seriously deficient. 55% of its iron ore is made up by imports. In addition to its own demand, India’s iron ore exports account for 60% of its exports abroad, and its export volume ranks third in the world. However, if India's steel industry is to compete with China, its iron ore will be mainly to meet the domestic supply demand, while the export trade of iron ore to China will be limited.

According to a report released by the World Steel Association, the demand for steel in India will increase by 13.3% in 2011, which is much higher than the global increase of 5.9%. In 2012, the growth of steel demand will further increase to 14.3%. The Indian steel industry has ambitions and has invested heavily in the expansion of steel mills. It can be said that India has already begun to start with ore resources to ensure the raw material source for steel production.

Indian government policy makers are willing to believe that the rapid growth of the iron and steel industry and more abundant iron ore, coal resources and cheap labor will provide India with a long-term competitive advantage. India's industrial management department has planned to achieve 120 million tons of steel production by 2012, an enormous increase. This is a potential challenge for the Chinese steel industry, which places the South Asian market as one of its export priorities.

Some industry figures predict that China's steel production will adjust from 600 million tons to 400 million tons in the next 10 years due to the adjustment or transformation of the steel industry. In this way, the Indian steel production in the future may exceed China. However, some analysts believe that it is difficult to achieve a growth target of 10% to 15% for Indian steel production. Over the past decade, the average steel consumption in India has increased by nearly 50%. However, if there is a need to coordinate the development of steel production with India, there is still a big gap. Although India will build a number of new steel mills and significantly increase its steel production capacity, its domestic market demand has not grown correspondingly. Therefore, it is necessary to shift surplus production to the international market.

In any case, the steel industry in China and India has already entered the "century dispute." Whether the Chinese steel industry will lose to India in the future will become the biggest suspense for the global steel industry.