Indian Steel Demand Leaped 15% in Apr-May '18

SEATTLE (Scrap Monster): The domestic steel demand in India is off to a flying start to the new fiscal year FY19, suggests the latest flash report released  by the country’s Joint Plant Committee (JPC).  The steel consumption during April –May ’18 witnessed a jump of 8.5%, when compared with the previous year. The yearly steel demand had surged higher by 7.9% in the full fiscal year FY18. Also, the steel imports rose significantly by nearly 15% during these two months.

The strength of domestic steel demand was evident from the fall in exports despite rise in steel output during this period. According to JPC, steel output was up by 6.1%. The increased domestic demand resulted in sharp decline in steel exports out of the country. The steel producers benefited from selling to domestic buyers rather than exporting them to overseas destinations.

ALSO READ: Global Steel Industry Shifts Focus to India as Robust Economic Growth Drives Output

The primary reason behind the tremendous growth in domestic demand growth was the steady pickup in automobile sales. The three major commercial vehicle companies reported 50% surge in combined sales during May this year. The automobile sales had been robust in April too. This led to huge demand growth for flat steel products. The demand from construction and infrastructure sector also witnessed decent recovery. On the other hand, slowdown in end use sectors such as real estate and industrial projects impacted the domestic demand for long steel products.

The projection by the ratings agency ICRA Ltd states that India’s domestic steel demand is expected to grow by 6-7% in the medium term, mainly on the back of government’s focus on infrastructure projects and rising consumer spending. Also, it expects steel prices to remain mostly firm.

In accordance with the National Steel Policy (NSP), the country aims to install 300 million tons of steel capacity by 2030.