Posco-Adani steel project could add to India’s oversupply, sources say

Posco and the Adani Group’s recently announced steel project will likely add to the steel oversupply in India until demand picks up sufficiently to consume the surplus volumes, market sources told Fastmarkets this week.

“While steel demand in India is expected to increase until 250 million tonnes per year eventually, it really depends on whether this project is started up and how economic development in the country is at the point of time,” an Indian steel trader in Singapore told Fastmarkets on Thursday January 20.

South Korean steelmaker Posco and Indian conglomerate Adani Group said on January 13 that they were working together to build a green, environmentally friendly greenfield integrated steel mill at Mundra, Gujarat, at an investment cost of $5 billion.

The steel mill will utilize Posco’s steelmaking and research and development technology, as well as use renewable energy resources and green hydrogen. The Adani Group will provide expertise in energy and infrastructure.

Sources said more clarity on the project is needed before any conclusions on its effects on the Indian and wider Asian steel markets can be made, although the capacity of the new steel mill is said to be less than 5 million tonnes per year and “may not have a big impact” on the market.

“It depends a lot on what are the final products produced. For example, whether they are long steel, flat steel, or metallics. It could also be that it produces pig iron to ship to China and Asia amid the strong decarbonization drive going on there,” the steel trader said.

Posco already runs a 1.8-million-tpy Posco-Maharashtra rerolling mill, which produces 0.17-2.30 millimeter thick cold-rolled coil at widths of 800-1,800mm for the automotive market, as well as four processing centers in Pune, Delhi, Chennai and Ahmedabad.

This is also just another steel project amid a multitude of other capacity expansion in India, such as those announced by other integrated steelmakers.

JSW Steel plans to expand its steelmaking capacity by 12 million tpy to 36.5 million tpy by 2024, while Tata Steel wants to double its steelmaking capacity to 40 million tpy at its Angul, Kalinganagar and Jamshedpur steelworks.

ArcelorMittal Nippon Steel India (AMNSI) is also seeking to increase its steel production capacity to 18 million tpy from 8.6 million tpy, while Japanese producer Nippon Steel – a joint venture partner in AMNSI – said it planned to build a second steel mill as part of AMNSI’s expansion.

“But of course, this will be impactful only if the plant is completed. A greenfield project takes time and there are many regulatory approvals needed. Can this memorandum of understanding (MOU) turn into reality?” a seller source close to an Indian integrated steelmaker said on Thursday.

“This will make the competition field more crowded of course, especially when west India is already dominated by two major integrated steelmakers,” he continued.

What to read next
The publication of Fastmarkets’ US and Brazil pig iron price assessments for Friday Feb 23 were delayed because of an administrative error.
Fastmarkets is inviting feedback from the industry on the pricing methodology for its steel billet import, cfr Manila, $/tonne, assessment, as part of its announced annual methodology review process.
Despite auto manufacturers' clear demand and willingness to pay a premium for green steel, understanding of the product varies widely in the industry, with larger OEMs like Ford, General Motors, and Volvo actively competing for its limited supply
Amid record volumes of imports, the Brazilian paper industry has joined steelmakers in requesting up to 25% import tariffs for certain products, which has worried importers and end users. In the wake of the Brazilian steel sector’s pleas in 2023, the Brazilian Tree Industry Association (Ibá) requested on January 16 that the government increase import duties […]
Trading activity for pellet feed imported into China increased in the week to Friday January 19, with more tenders from Australia. The pellet feed premium, however, continued to face downward pressure from uncertain demand outlook among market participants, sources told Fastmarkets
High stainless steel production in China in 2023 generated lofty imports of raw materials, including chrome ore, ferro-chrome, nickel pig iron (NPI) and ferro-nickel