Steel consumption up 8% on high infra, auto demand

NEW DELHI: Steel consumption grew 8% in the fiscal year ended March 2010 after shrinking a little a year ago, due to strong demand from automobile, infrastructure and housing sectors, as per the steel ministry. Demand for the metal is a key indicator of industrial activity and steel consumption had shrunk 0.5% in the year ended March 2009 as economic slowdown hit domestic demand.

“The growing demand as well as the low-base factor made it a staggering year for steel companies,” said a steel ministry official, requesting anonymity.

The country’s steel consumption increased to 56.3 mt in the twelve months to March 2010 from 52.3 mt in the previous year. Production in the world’s fifth-largest steel producing nation rose 4.2% to 60 mt.

Domestic demand fuelled 23% growth in steel imports to 7.2 mt for the fiscal even as exports declined by almost a third as global demand is yet to see a strong recovery. The government’s planned investments for the infrastructure sector will continue to boost domestic steel demand this year, steel analysts said.

Navin Vohra partner at advisory firm Ernst & Young said demand is robust and India’s steel production is expected to post 8-10% growth in the current year, partly due to new capacities which will become operational.

Global steel prices have started moving up on the back of improving demand. Top Indian steelmakers including SAIL, Tata Steel, JSW and Essar hiked prices by up to Rs 3,000/tonne effective April 1.