Robust domestic demand and softer raw material prices have driven a recent rally in the stock prices of blue-chip steel companies, such as Tata Steel, JSW Steel, Jindal Steel and Power, and Steel Authority of India (SAIL).
Domestic steel demand from key steel-consuming sectors such as real estate, infrastructure and automobiles has remained robust in recent times. It is also driven by the government’s spending on infrastructure ahead of the 2024 general election.
Steel consumption in August was up 19% year-on-year and 3.8% month-on-month domestically, continuing a trend of double-digit growth in recent years. Between April and August of the ongoing fiscal year, domestic steel demand has registered a healthy growth of 13% (11.4% and 13.4% in fiscals 2021-22 and 2022-23, respectively).
Local demand is offsetting the weakness in the global steel market, making India a bright spot in an otherwise weak global economy. As a result, global steel majors from China, Japan and South Korea are routing their produce to India, thus offering competition to domestic players.
A GLOBAL COMMODITY
Competition in the global steel business cannot be wished away. As steel is a standardized commodity, it can be shipped and used anywhere in the world.
Steel manufacturers produce long products, such as bars, wires and wire rods, which are primarily used in the construction industry, accounting for around 65% of total steel demand in India.
Flat products, on the other hand, which include hot rolled coils (HRC), and cold rolled coils (CRC), are mainly used in the automobile, pipes and consumer durable industries.
This story is from the September, 2023 edition of Beyond Market.
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This story is from the September, 2023 edition of Beyond Market.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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