Japan’s JFE Steel Corp expects India’s steel industry to overtake China’s in the long run, and wants to position itself to be the biggest foreign producer of the material in the South Asian nation, a senior executive said.
The Japanese firm announced its largest-ever overseas investment of nearly $2 billion in India last month, partially on the conviction that the country will soon be producing the world’s largest share of steel, JFE’s executive vice-president Hiroyuki Ogawa, told Bloomberg News on Tuesday.
“So far, we have not yet found any other market that could follow India,” Ogawa said, though he added the company was also looking at opportunities in the US.
India’s steel industry has expanded rapidly over the past decade, yet its output remains just a fraction of China’s. The government has set a target to reach annual capacity of 300 million tonnes by 2030-2031 and producers have been encouraged by accelerating urbanisation and industrial growth in country.
JFE said in December it will invest ₹15,750 crore for a 50 per cent stake in Bhushan Power & Steel Ltd , an unlisted subsidiary of JSW Steel. Using the JV’s own earnings or new corporate debt, the plant’s annual capacity could be expanded to 15 million tonnes, which would make it “one of the largest integrated steel facilities” in India, according to JFE.
“We will start commercial operations sometime in 2029 or 2030 at the latest,” Ogawa said. BPSL operates a 4.5 mt plant in Odisha at present.
JFE and JSW’s partnership dates back to 2010, when the Japanese firm invested about 90 billion yen ($565 million) in it. That helped more than triple JSW’s annual capacity to 28 million tonnes and since then, JFE “made almost no additional investments,” Ogawa said.
JSW has shown a track record of strong execution, he added, completing expansions within three to four years and faster than competitors.
Like other countries, India faces risks from an influx of low-cost Chinese steel, but Ogawa was optimistic about its ability to tackle the issue.
“Given New Delhi is promoting a Make-in-India policy, it is not a country that just stands by and watches China’s low-cost steel products flooding its own market,” he said.
