Hindi-Chini steel bhai

METALS UPDATE

China and India carry the global steel industry on their shoulders.

President Hu might not have said it on his India tour but China and India will effectively carry the global steel industry on their shoulders for what looks like a decade at least.

The two will continue to dominate steel demand growth till 2015, according to a forecast by the International Iron and Steel Institute (IISI)

On the supply side, China already leads in steel output, and India has concrete plans for rapidly growing its output. While China's appetite for steel may have peaked for the time being, India's appetite is in all probability being whetted.

On the demand side, the IISI survey indicates that till 2010 global demand will grow at 4.9 per cent compared to 7 per cent in India and 8.4 per cent in China.

The IISI economic committee has also projected a 4.2 per cent annual growth in world steel demand from 2010 to 2015, as against 7.7 per cent for India and 6.2 per cent for China.

India has done well even in the current year, though China topped the growth chart. With increasing expenditure on infrastructure and construction in India, IISI has pegged the apparent rise in steel use in India in 2006 to 10 per cent. A clear winner, China is likely to record a 14 per cent increase.

Looking forward, the strongest growth region in 2007 will still be China with an increase in steel use from 374 million tonnes in 2006 to 413 million tonnes in 2007.

However, this moderate growth rate in China might not augur well for the industry. Even a slight deviation in China's consumption pattern could have a significant impact on steel prices that have been riding high mainly on the back of Chinese demand.