India's secondary steel sector, where scrap and direct-reduced iron (DRI) are key feedstocks, accounts for over 40pc of the country's overall steel production capacity. The sector is poised to grow as India aims to achieve a capacity of 300mn t/yr of crude steel by 2030 and push for greener pathways.
Argus spoke to Harsh Tekriwal, managing director at manufacturing company Monolithisch India, about expansions in the secondary steel segment and the outlook for the sector. Monolithisch produces and supplies ramming mass for lining induction furnaces to about 80pc of India's secondary steel producers — particularly those in the eastern part of the country. Edited highlights from the interview follow:
What is the secondary steel sector's growth potential over the next few years?
India is consuming around 100kg of steel on a per capita basis, lower than the world average of 215kg per capita in 2024. If India is to grow by 6-7 pc/yr, the basic understanding is that it cannot grow without steel.
So, the per capita consumption must increase and over the next 3-4 years, we expect robust competition between the primary and the secondary sectors in terms of which one will produce more steel.
At present, rebar manufactured by some major integrated steelmakers is at a 20-25pc higher price band than steel produced by our customers.
Also, the secondary steel sector has a lower carbon footprint compared with the primary steel sector. There are 15 or more furnaces running on the same shop floor, being as cost effective as possible and utilising electricity in the most optimum way. So I believe secondary steel is poised for stronger growth than the primary steel market.
What kind of capacity expansions have secondary steelmakers undertaken?
About 10-15 years earlier, companies which had five or seven furnaces in a single plant were rare. Now even our smallest customers will typically have three or four furnaces, and the larger players will have 20-40 or so. At least 25pc of our customers are going to double their capacity in the next 1½ years.
What are Monolithisch India's expansion plans?
We had 144,000 t/yr of ramming mass capacity, when we went for an initial public offering a few months earlier. We became a 156,000 t/yr unit last month. We are aiming to raise our capacity to around 260,000-275,000 t/yr by 31 December.
The driving force behind the capacity expansion is the growth potential in India's eastern region. The world's best raw material is available here, and most secondary steel labourers come from this region so there is ample availability of labour, which is a critical resource.
So, the environment is very conducive for a company's growth. There is so much development happening in Odisha and West Bengal.
We want to ensure that we can fulfil existing and future demand.
How are international developments, particularly uncertainty around US tariffs, affecting secondary steelmakers?
The world is very volatile right now, so any surprise that comes from the west could halt their progress a bit but not derail it completely.
Secondary steel producers are not directly affected by the US tariffs situation because they supply mainly to the domestic market in India.
I also think their export opportunities to Nepal and Bangladesh may have increased. Nepal has been suffering from electricity issues for the last 1½ years. So, I think some material might be going there and the same kind of situation is there in Bangladesh because of the instability.
How will recent goods and services tax (GST) reforms impact your market?
These changes are likely to leave more cash in the hands of the end-consumers, which in turn can drive demand across categories. The reforms may not have a direct impact on our industry's cost structure, but the indirect benefits will certainly help overall growth.
