The steel industry is undergoing several transformations. On one hand emphasis on the adoption of green technologies remains while changes in tax structures, etc., are also disrupting the industry. Here is an outlook for key factors that will have an impact on the steel industry in 2023.
1. Steel demand to grow in India
At the beginning of FY 24, the Indian Steel Association (ISA) projected that the steel demand would grow by 7.5% in the year 2023-24. On the other hand, ICRA, a credit rating firm had projected a demand growth of 7%-8%. However, the company recently revised its projections upward to 9%-10%. The higher demand for steel is attributed to several infrastructure development projects taking place in India. Steel is a major component in the construction.
2. EU carbon tax
EU plans to implement a carbon tax on products such as steel. As an initial phase of the plant, all steel exporters will have to submit a report on carbon emissions that occurred during the production of exported steel production from October 1, 2023. Although the government of India said that it will protect the interest of Indian businesses, companies will have to set up a mechanism for measuring carbon emissions sooner or later. As a result, implementing a carbon measuring mechanism is the way forward in 2023-24 for steel exporters.
There is an immense push toward decarbonisation of the steel industry. Some of the practical technologies that are being adopted by the global steel industry include hydrogen-based technologies, electric arc furnaces, carbon capture storage, use of renewable energy and so on. In the coming years, more and more companies are expected to make investments in green technologies.
Another factor in reducing environmental impact is recycling. According to the Government of India, each tonne of steel scrap used in steel production can save up to 1.1 tonnes of iron ore. Moreover, it also saves 630 kg of coking coal and 55 kg of limestone while reducing energy consumption by 16%-17%. Therefore, the Government of India introduced a scrap steel policy. It aims at standardising the recycling steel process in the country. Therefore, recycling steel is the road ahead for the steel industry in 2023 and beyond.
5. Technology adoption
Apart from technologies for decarbonisation technologies, steel-making companies will have to adopt several innovative technologies to stay competitive in the market. Digitalisation is one of the ways to improve efficiency, boost productivity and enhance quality. One of the key challenges in the adoption of new technologies remains as higher initial cost. However, steelmakers will need to take an innovative approach to be competitive in the global market.