Domestic steel production up 15% in 8 months

Rising demand has perked up domestic steel production by 15.3 per cent in the first eight months of the year when Indian steelmakers produced 28 million tonne against 24.3 million tonne in the corresponding period last year, according to the Brussels-based International Iron and Steel Institute.

Only China, which grew at 18.6 per cent this year added more capacity on a larger base. The world's largest steelmaker produced 272.5 million tonne in the first eight months compared with 229.8 million tonne in 2005 and is well on its way to topping the 400 million tonne mark this year.

World steel production during the eight months stood at 801.9 million tonne, up 9.4 per cent from last year's 733.1 million tonne in January-August of 2005.

This was driven primarily by growth in Asia, which added 422.4 million tonne in the said period at 13.1 per cent growth.

While Europe and North America grew at 5.89 per cent and 7 per cent respectively, South America (-1.5 per cent) and Africa (-5.1 per cent) registered a drop in growth.

Analysts believe that the domestic growth phenomena is not an anomaly and is sustainable if India can keep its GDP at 8 per cent and above.

The growth in the same eight months in 2005 over the preceding year was almost 14.5 per cent.

"The steel industry has the potential to grow at 15 per cent every year for a long time. This is the early phase of steel-based development driven by the construction and manufacturing industries," said a leading industry expert.

He added that the manufacturing sector fast catching up with the services sector in growth rates augured well for the sector. Other factors such as growth being investment led and increasing use of steel in the economy only tilted the balance in favour of a strong long-term outlook for the sector.

Analysts said India was not yet on the threshold of a extraordinary growth phase as experienced by China between 2000 and now, when the country's steel production catapulted from 126 million tonne to projected over 400 million tonne this year.

However, they added that for a decade before the extraordinary growth phase, China's steel growth varied between 2 and 14 per cent before the spurt came.