The Indian steel industry grew slightly during April-December 2008-09, but it does not indicate that the industry will continue to grow in future.
In the backdrop of piling inventories, a big worry for steel producers, the Indian steel industry registered marginal growth of 1.1% to 421 Lakh Tonnes during April-December of 2008-09.
The volume of steel production reached 416 Lakh Tonnes during Apr-Dec 2008-09. In the review period, the finished steel consumption, including non-alloy and alloy, dropped 1.3% to 382 Lakh Tonnes from 387 Lakh Tonnes in Apr-Dec of 2007-08. Moreover, the steel exports soared 36% to 2.29 Lakh Tonnes in December 2008 from 1.8 Lakh Tonnes in November 2008. As per the provisional data released by the Steel Ministry, the demand for carbon steel, used in automobile and construction sectors, plunged 2.5% to 357 Lakh Tonnes, whereas alloy steel, used in manufacturing train wheels, rose 21.2% to 24 Lakh Tonnes.
Increased demand between April and September 2008 was responsible for marginal rise in the steel production, but with the onset of the global economic turmoil, the consumption started plummeting from October onwards. In fact, the trend of high demand and increased profits for steel companies continued till September 2008, but the trend reversed afterwards that led to fall in prices and demand.
Further, the ongoing global economic slowdown triggered decline in demand for steel as well as its prices, while the raw material prices remained high; consequently, the viability of the sector was affected.
In the wake of increasing demand, steel companies continued to run their plants at the optimum level till September 2008, but soon after, the demand plunged and inventories increased. Since September, inventories kept rising till December 2008, when companies managed to clear their stocks through export.
According to a Research Analyst at RNCOS, “Although the Indian steel industry recorded slight growth in production, it should not be considered that the industry is back on the track. In reality, the steel demand and prices have slipped down on account of the economic crisis. Besides this, major steel producers have withheld their future expansion plans on account of crisis and their decision will impact the country’s overall economy and employment.”
Related Market Research Reports:
US Steel Industry Outlook
UAE Steel Industry Analysis
China Steel Industry Forecast till 2012
