Heat Treat Industry News
January 11, 2010
Steel offtake up 8% in Apr-Dec on auto, core sector demands
NEW DELHI: India’s steel consumption rose close to 8 per cent during April-December 2009, over the year ago period, buoyed by strong demand from the automobile and infrastructure sectors, as per the provisional data of steel ministry. It is estimated that growth gathered pace in the three months to end-December compared with the first half of the current financial year ending September, partly due to low base effect of the previous year.
Indian steelmakers cut production by up to 40 per cent in the October-December 2008 as demand dropped significantly due to economic slowdown. This led to a 0.5 per cent decline in steel consumption for the full year ending March 2009.
But the economic stimulus packages announced by the government early last year have had a positive impact on demand. Higher consumption is an indication of a sharp turnaround in industrial activity since then. Steel consumption as well as production is likely to be higher for the full year ending March 2010 due to the low base effect, said a senior steel ministry official requesting anonymity.
The nine-month period of the current fiscal saw finished steel consumption rise to 41 million tonne from 38 million tonne in the year-ago period. Steel production, on the other hand, grew 3.5 per cent to 44 million tonne during April-December 2009, from 42.5 million tonne a year ago, as most of the steel companies such as JSW and Essar had resumed normal production.
“The growth was expected as industrial activity has picked up in almost all the sectors. The automobile and infrastructure sectors, however, remain major drivers of steel demand,” Ernst & Young partner Navin Vohra said. He said increase in iron ore prices, a key input in steel making, is pushing steel prices upwards in the domestic market and so inflation is going to be a challenge in the future.
Recently, top steel makers including Sail, Tata Steel, Essar and JSW increased prices of steel products up to Rs 2,000 a tonne for the current month citing high demand.
Steel products in the domestic market are currently selling for Rs 32,000-34,000/tonne, marginally higher than the landed price of imported steel. The April-December, 2009, period also saw imports move up 16 per cent to 5.2 million tonne.
Steel prices have started moving up internationally as well hinting at moderate revival in global demand. “Although demand for metal has picked up in the US and some parts of Europe, some steel companies in these countries still have huge spare capacities,” said a Delhi-based steel industry analyst. He said work on various projects in railways, aviation and telecom sector is on, which would give a further boost to steel consumption in India.
11 Jan 2010, 1039 hrs IST, Pramugdha Mamgain, ET Bureau
SOURCE: THE ECONOMIC TIMES
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