Indian Steel: Consumption Challenges

Emerging demand requires existing profiles with additional features and value-added steel

- Madhumita Mookerji

After two years of a slowdown, the steel industry is again showing signs of a rejuvenation. Demand for steel has a very close interaction with how the total economy behaves over the next few years. In fact, analysts feel that is the single most important factor which will determine whether steel demand will remain buoyant or not. But, in this regard, the industry stakeholders can heave a sigh of relief that India has so far exhibited a very strong case for a steel demand revival. The GDP growth, a major economic parameter, is quite substantial. In fact, it is one of the highest in the world. India would be Asia’s fastest growing large economy in 2018- 22, expanding at an average rate of 7.9 percent. In 2017, as per the World Bank, India’s GDP growth was at 7.2 percent against China’s 6.5 percent and the global average of 2.7 percent. In 2018, it predicts India’s growth at 7.3 percent, China’s at 6.3 percent against the global average of 2.9 percent.

The GDP growth in the fourth quarter (Q4) of fiscal year 2017-18 at 7.7 percent is encouraging.

Other key factors like the current account deficit (CAD) is also within a manageable limit, at less than 2 percent of the GDP. Inflation has been at 4-5 percent, while fiscal deficit is also well within the target of 3.5 percent. Forex reserves are quite comfortable, at more than 15 months imports that can be covered.

In fact, India is the only bright spot in steel consumption with 8 percent growth when overall world consumption is inching up by 1-2 percent, Sushim Banerjee, Director General, INSDAG, said while speaking at a recent metals conclave.

Importantly, India’s per capita steel consumption has increased to 71 kg from the earlier 65 kg, said informed sources, adding that rural steel consumption has increased to 17 kg from the earlier 11 kg.