Chances of the Indian economy recovering faster than its global peers from the current slowdown looked brighter with the World Steel Association (worldsteel) forecasting a 2% growth in the country’s steel consumption in 2009, making it the only major economy to post an increase in a year that will see global consumption of the metal fall by around 15%.
India, which accounts for around 5% of the global steel consumption, will use 53.5 million tonnes of the metal in 2009. The global consumption of steel this year is expected to be around 1,019 million tonnes.
Worldsteel, an international trade body whose 180 members account for 85% of the world’s steel output, has said the global steel industry will stabilise later this year to stage a gradual recovery in 2010. Egypt and Iran are the only other countries that will witness an increase in steel demand this year.
Steel consumption in the BRIC countries (Brazil, Russia, India and China) is expected to fall by 5.9% in 2009. The ‘short-term steel outlook’ of the Brussels-based association said steel demand in the US and Europe would shrink by 36.6% and 25%, respectively. Steel use in China and Japan are slated to fall by 5% and 20.4%, respectively.
While worldsteel did not cite any reason for the growth in steel consumption in India, analysts said this could be attributed to the low per capita steel consumption at present. The country’s per capital steel consumption is about 45 kg, compared with the global average of 200 kg.
“Considering a GDP growth forecast of 5-6%, spending on various construction and infrastructure projects will grow this year, which will reflect in an increased steel consumption. Since investments have come to a standstill in most economies, steel consumption is likely to get impacted globally,” said Abheek Barua, chief economist, HDFC Bank.
Growth in the construction and infrastructure sectors could help India record a 5% growth in steel consumption, said Naveen Vohra, partner, Ernst & Young. “Demand in the auto sector has also started looking up on the back of a marginal improvement in the credit situation,” he said.
Despite low levels of steel consumption in the country, demand had fallen sharply during October-December 2008. The steel industry, however, staged a smart recovery in the first three months of 2009 on account of a revival in demand from the automobile, rural infrastructure and housing sectors.
Steel production and consumption grew 1.2% and 3.8%, respectively, in the January-March quarter over the same period last year, after posting dismal figures in the previous quarter.
Source: The Economic Times 29/04/09