Production of steel in the first half of the current fiscal grew marginally by about 0.5 per cent, while consumption rose by about 1 per cent, according to preliminary official estimates.
The production of finished steel during April-September was 14.7 million tonne (mt) against 14.6 mt achieved during the same period last fiscal.
The consumption of steel also grew marginally to 13.5 mt against the figure of 12.92 mt achieved during the same period last fiscal, an increase of about 1 per cent. "The consumption pattern witnessed a declining growth rate after the first five months of the current fiscal," official sources said, adding that consumption may witness a negative growth rate in the coming months.
India produced 29.26 mt steel in the last fiscal as against 26.71 mt in 1999-2000. The country continued to be the 10th largest steel producing country in the world. "The steel industry globally is characterised by excess capacity and poor demand and the global economic slowdown has hit the industry hard," a senior official with Steel Authority of India (SAIL) said.
The global slowdown and lack of demand from the sectors such as auto and construction have been adversely affecting the steel sector, the SAIL official said. "The consumption of steel may increase by December, once the rains stop," he said.
The gloomy economic scenario has resulted in protectionism within the developed countries and dumping of cheap imports. The United States has recently imposed anti-dumping and countervailing duties against the import of hot-rolled coil from India. The steel sector represents around Rs 90,000 crore of capital and directly employs about more than 5 lakh people.
However, companies expect a rise in steel consumption and production in the second half of the current financial year. To begin with, several steel companies expect work to commence on the Prime Minister's Rural Roads Project and the Golden Quadrilateral project. Steel producers estimate that the additional demand generated by these projects will run into several million tonne. In addition, the steel producers also expect to reap the benefits of the spate of interest rate cuts done by various central banks. Most of them expect the second half of the year to be better than the first.
