Surge in steel demand not sustainable in FY'10: Experts

NEW DELHI: The reprieve for domestic steel majors such as SAIL, Tata Steel and Jindals may be short lived as analysts predict the demand growth seen in last three months will not sustain the year 2009-10 and consequently cut short the dream of price revival.

"The surge in steel demand in the March quarter was a correction over the October-December period when consuming firms had virtually stopped buying the commodity and is not sustainable for the whole fiscal," consulting firm Booz & Co Principal Piyush Doshi said.

Steel demand grew in the range of 10-15 per cent in the January-March quarter after declining by about 14 per cent in the previous quarter.

JSW Steel chief Sajjan Jindal termed the recent growth in demand as a "feel-good factor" for the sector, while steel secretary P K Rastogi called it a "silverlining" for the economy.

Analysts, however, differed with the 'over-optimism' and said the double-digit growth in the steel sector could not be realistically maintained as the economy is going through a rough phase amidst the global industrial downturn.

"The double-digit growth is not sustainable as it requires the economy to grow at 9-10 per cent which is not going to happen anytime soon," Ernst & Young Partner Naveen Vohra said.