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India’s steel consumption poised to cross psychological 100-million tonne mark in 2019

Apr 11,2019

A forecast by Indian Steel Association an industry body comprising domestic steel producers has said, India’s steel consumption is poised to cross the psychological 100-million tonne mark in 2019.


The consumption growth is tipped to be driven by an expected 7.1% growth in domestic steel demand in the calendar year 2019; the ISA said adding that demand is probably going to grow marginally in the next calendar year 2020 by 7.2%. For financial years 2019-20 and 2020-21, however, the prediction for steel demand growth is 7.2%.


"Consumption growth is predicted to improve driven by measures for farmers, unorganized sector and government employees. Cumulatively, the Indian economy is likely to maintain above 7% growth in the next few years," the statement said.


While the economy witnessed a strong growth of above 8% during the first half of 2018, it slowed down in the second half of 2018, primarily due to the weaker rural sector. In addition, high oil prices combined with a weakening rupee dampened the demand in general.


Investment driven sectors such as capital goods, construction, & Railways are likely to maintain the healthy growth momentum driven by infrastructure projects such as Sagarmala, Railway track electrification, Bharatmala, dedicated freight corridors, metro rails, etc.


In addition, while, reduction in GST rates will support the real estate demand, ongoing capacity additions in the renewable energy sector would continue to boost the electrical equipment demand. Construction sector growth is estimated to be at 6.8-7.2% in the next few years, whereas Capital goods & Railways sectors are projected to grow by 6.4-6.8% and 6-6.5% respectively for a similar period.


Amongst the consumption driven sectors, automotive and durable goods have clocked about to 16% and 22% growth respectively in 2018. However, the automotive sector is witnessing softer demand conditions since Oct-Nov 2018.


Going by the recent trend, and a powerful base effect, growth is anticipated to slow down in the first half of 2019.


" However, revival is anticipated in the second half of the year with pre-buying before BS-VI implementation and improvement in consumption growth. On the other hand, growth for consumer goods sector is projected to normalize from a powerful growth in 2018, which was mainly driven by GST reduction in AC, washing machine & refrigerators. Both the automotive and consumer goods sectors are estimated to grow at near 7% in the next few years," the ISA forecast added.


Intermediate goods that are driven by both investments and consumption will see some moderation in demand on account of weaker growth in the automotive sector; however, pipes and other packaging materials will still grow at a stable pace. Overall the sector is probably going to grow by 6-6.5% in next few years, ISA said.