The fears have been confirmed. The Indian government has acknowledged of a massive slowdown in India’s steel consumption.
The Joint Plant Committee (JPC), a steel ministry body, has just reported that India’s steel consumption grew by a mere 0.3 percent in the first five months of current fiscal year at 30.345 million tons (MT).
The committee agreed to what analysts were saying all along – steel consumption had been impacted in the April-August 2013 period by the slowdown in India’s domestic economy.
But the “depressed” JPC report has not found resonance in the growth predictions of some of India’s steel major producers. While agreeing that domestic economic conditions had negatively impacted use, Tata Steel, for example, still feels that steel consumption was likely to grow by about five percent in the current fiscal year.
A report in India’s Economic Times quoted Tata Steel Managing Director H.M. Nerurkar as saying his company still held the view that India “should have the consumption growth of around five percent in current fiscal year.”
Incidentally, last year, the country’s steel consumption had moved up by just 3.3 percent, the lowest in the last three years. In 2011-12, it had gone up by 5.5 percent, and in 2010-11, it was up by 9.9 percent.
Much of India’s steel growth, indeed its overall economic growth, has come down by a drop in mining, because of the legal ban, and a fall in manufacturing output. So much so that India’s economic growth in the April-June quarter this year had slid to a record-low of 4.4 percent.
Another report in Business Standard said that as per the JPC, total production for sale grew by 4.9 percent during the April-August period of the current year at 33.342 MT compared to 31.781 MT in the same period last year.
Interestingly, the well-known industry body World Steel Association (WSA) had earlier pegged India’s steel demand growth at 5.9 percent to 75.8 MT in 2013. But that target now seems off-key.
The Tata Steel MD said slowdowns in automobile and real estate would have impacted on steel consumption this year, as also reported by MetalMiner a few days ago.
Some other major producers of steel in India like the state-run Steel Authority of India (SAIL) also reported a mere 0.3 percent growth in production during the April-August period at 4.170 MT.
No Country for Old Steel Buyers
The balance between consumption and availability of steel thus stood at over 3.5 MT by the end of August. So, what all this means is that while steel production is posting some measure of growth, there are very few buyers of that steel in India right now.
To recover lost time, what needs to happen in the remaining months of 2013 is an increase in construction activity, growth in the sale of automobiles, and some kind of step-up in economic activity. Or else, some analysts fear, the gap between consumption and production may remain very wide till year-end.