Steel consumption rebounded sharply in the April-June quarter with volumes growing by 8.8 per cent over the corresponding period a year ago.
This was led by improved offtake from ongoing expansion in construction and infrastructure projects.
Provisional estimates by the Joint Plant Committee under the Steel Ministry indicate that consumption for the June quarter grew to 18.195 million tonnes. In the same quarter last year, consumption was 16.72 million tonnes, registering a mere 1.5 per cent growth.
Total production of finished steel for the latest quarter grew 4.9 per cent to 18.87 million tonnes against 18 million tonnes in corresponding last period. Imports rose sharply by 41.2 per cent to 1.99 million tonnes during the quarter (1.41 million tonnes). Exports were down 15.2 per cent to 1 million tonnes (1.18 million tonnes).
Long products
“The improved consumption is led by demand for long products from ongoing projects in the construction sector, though fresh investments are not happening,” said Mr Sushim Banerjee, Director-General, Institute for Steel Development and Growth (INSDAG).
Mr Banerjee estimates growth offtake for long products at over 10 per cent, and for flats at 5 per cent. The prolonged dry period during the summer months could have also contributed to the increased offtake. The strong demand has kept domestic steel prices largely stable, while there has been a slump globally.
“The Indian market has not seen any impact of the fall in global prices. I foresee the demand to be reasonably good for rest of the year,” said Mr C.S. Verma, Chairman, SAIL, the country’s largest producer.
The higher steel consumption could spur GDP growth, which has faltered in recent quarters. Experts say the higher steel offtake will have a multiplier effect on GDP. In all likelihood, India will grow more than 5.3 per cent in the June quarter.
Outlook
Steel consumption grew at 6 per cent in 2011-12. For the current fiscal, large steel-makers such as SAIL and Tata Steel expect domestic consumption to grow between 8-9 per cent. The World Steel Association (WSA), in its short range outlook for 2012, has predicted a rebound in Indian steel demand, pegging the off-take at 6.9 per cent to 72.5 million tonnes. For 2013, the WSA expects growth rate to accelerate further to 9.4 per cent on the back of urbanisation and surging infrastructure investment.