Re-melted Steel Market Growth: Opportunities for MSMEs in 2025

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Introduction: The Steel Surge in 2025

India's demand for steel is projected to exceed 8-9% by 2025, primarily driven by infrastructure development and urbanization. This prospect injects new opportunity into many sectors, especially amongst MSMEs - given the level of products and services that demand steel will experience substantial drive going forward. With the projected rise in steel demand in India, MSMEs have a chance to scale operations by leveraging re-melted steel and tapping into government-led infrastructure projects.

At the same time, a growing steel and related market also creates challenges, particularly challenges around how to procure steel in the first place. To be successful and productive, amidst the larger demand for steel for even the most insignificant business operations, MSMEs must demonstrate high levels of strategy around sourcing and procurement that maintain their competitiveness and reduce pricing, determined by their sustainable practices, driving their models forward.

Given this context, re-melted steel can provide a good, reliable and sustainable procurement opportunity for MSMEs. By using re-melted steel, businesses can achieve better procurement pricing and lower impact by utilizing re-melted steel. This article explores how the recent growth of the re-melted steel market creates new procurement opportunities for MSMEs and how they may engage with and benefit from these opportunities.

Re-melted Steel: The MSME Advantage

Re-melted steel can be a change-maker for many MSMEs. Here are some of the reasons why:

Cost-Effective Procurement: Re-melted steel, also referred to as recycled steel, is often much cheaper than using virgin steel. This is especially beneficial for MSMEs operating on a limited budget. Now that re-melted steel is becoming more available in India, the procurement of cost-effective steel is more accessible. Online platforms such as the Government e-Marketplace (GeM) are making this process even easier for businesses by providing a level playing field with competitively priced steel.
Alignment with Sustainability: Sustainability is becoming more top of mind for many businesses across industries. Re-melted steel, because it is recycled, is more sustainable than traditional steel products. This means that MSMEs can not only drive down costs for their projects but also align with emerging global sustainability trends by sourcing re-melted steel. Government programs like the PM Gati Shakti programme are encouraging sustainability in the public infrastructure sector, reinforcing an interest in the adoption of greener alternatives, and emphasizing the use of re-melted steel.
Supply Chain Stability: One of the key challenges for MSMEs is supply chain interruptions related to steel procurement. By using re-melted steel products to replace different steel products, along with the ability to secure a steady supply of material, MSMEs can lessen their dependence on fluctuating raw material markets by using a more reliable, predictable supply of steel products, thus adding less risk to their supply chain.

Government Policies Shaping Steel Procurement

Government schemes contribute significantly to how steel procurement is carried out. The government has introduced various schemes and initiatives that smaller micro, small, and medium enterprises (MSMEs) can utilize including the following:

GeM Portal: GeM (Government e-Marketplace) is a digital marketplace for the procurement of goods and services transparently and competitively. It gives MSMEs access to government tenders as well and to procure steel at better prices, particularly re-melted steel, with a long-term mindset. The risk with this scheme is that the government bodies will make their own decisions on who will be the suppliers, and that the awarded contracts will become competitive. However, if anything at GeM is positive, it is that it has made procurement processes much easier for MSMEs.
PM Gati Shakti: For instance, this government initiative, the PM Gati Shakti National Master Plan for multi-modal connectivity, is all about fast-tracking infrastructure development in India. This initiative has a further aim of ramping up the government's infrastructure project development and delivery, so the steel demand will increase too (including re-melted steel). MSMEs in construction and related sectors will have good opportunities in government large-scale infrastructure projects while procuring steel through GeM procurements, ultimately leveraging these projects for their own procurement.
TReDS Platform: The Trade Receivables Discounting System platform allows MSMEs to get their working capital by discounting their trade receivables. TReDS helps with cash flow, which could be essential when it comes time to pay for raw materials like steel. Being able to utilize TReDS helps MSMEs ensure they have the cash to buy steel without having cash issues in the interim.

Real-World MSME Procurement Challenges

In the real world of steel sourcing, there are some procurement challenges to be dealt with, especially the effects of market volatility and inefficiencies in the supply chain system, which are impacting MSMEs. As an example, the Indian government had proposed a safeguard duty on steel imports, and this has the potential to raise the price of steel for Indian buyers, including some MSMEs. The current preoccupation of many MSMEs relates to the higher cost of steel (not a new experience), however, they need to consider the opportunity to shift their service delivery to a more sustainable and potentially cheaper product, like re-melted steel. We would hope that with a focus on recycled steel, even the impact of rising steel prices will suit the operational change to conceptualize their value propositions, as the greater risk is disruptions to sourcing supply line alternatives because steel prices are higher.

One of the great insights is that MSMEs are adapting to shifting procurement dynamics and adopting digital platforms to source materials.

Leveraging Digital Platforms for Steel Procurement

The digital transformation of procurement has simplified the process of sourcing re-melted steel for MSMEs, making it easier to buy re-melted steel at market-competitive prices. Here's how:

Digital Marketplace: Marketplace platforms provide MSMEs simple access to many suppliers. MSMEs can find suppliers who sell the items they want to buy, compare prices, vendor ratings and work on pricing and delivery.
Artificially Intelligent Solutions: Organizations are now using artificially intelligent (AI) driven procurement solutions, which provide some benefits to MSMEs relative to their tender-vendor selection and order management process. The advantages of reducing manual errors, shortening procurement cycles, and ensuring that the MSME can continue to obtain materials on time, like re-melted steel, are significant.
Integrated Logistics: Integrated logistics will ensure that steel supplies required for projects keeping lead times down and project delivery timelines. This is key in operational efficiency between MSMEs in construction, manufacturing, and infrastructure. Partnering with logistics providers that offer real-time tracking and optimized transportation schedules will provide MSME equal and better opportunities to control their supply chains.

Future Outlook: Opportunities for MSMEs

The re-melted steel market's growth in 2025 offers multiple key opportunities for MSMEs:

Increased Competitiveness: MSMEs can access sustainable, low-cost materials (if they are pre-approved by the respective industry standards) and can allow MSMEs to price their products and services competitively. This enables them to be competitive in construction, manufacturing, and infrastructure. With the renewed focus on sustainability and the importance of steel as a critical resource, MSMEs can maintain competitiveness.
Sustainability Credentials: MSMEs will not only be saving on sourcing materials, but also using re-melted steel will assist MSMEs in improving their sustainability credentials, as both firms and governments will be seeking and prioritizing sustainability-focused businesses. With many companies now required to demonstrate their green commitments to both customers and clients, this is an opportunity to help position your firm's transformation journey with a green initiative.
Market Expansion: The PM Gati Shakti Initiative and various public sector/government infrastructure development projects are opening the doors for MSMEs to scale and utilize re-melted steels and bag these contracts. These projects will help MSMEs expand their business with entry into new markets and industries.

Conclusion

The growth of the re-melted steel market will open up significant opportunities in 2025 for MSMEs. By incorporating re-melted steel into their sourcing process, MSMEs benefit from reduced procurement costs, create sustainability advantages, and simplify their sourcing options within the complex Indian steel market. With government initiatives such as GeM and PM Gati Shakti providing an excellent platform for the procurement process, MSMEs can take advantage of this transition.

To learn more about how to streamline your steel procurement process and identify trusted suppliers, visit Tata nexarc platform for B2B solutions.