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India's steel consumption grew by a mere 0.3% in the first 5 months of the current fiscal to 31.16 million tonnes, plagued by poor demand from the end-use segments such as construction and automobiles.
The consumption of steel during the April-August period of the last fiscal was 31.06 MT, according to Joint Plant Committee (JPC), a body under the Steel Ministry.
India had logged its four-year low steel consumption last fiscal (2013-14), clocking 0.3% growth at 73.93 MT, impacted by a slower expansion of the domestic economy and lower imports.
Industry sources said that continuing with the last two years' trend, steel demand remained subdued so far in current fiscal and going by the trend, a dramatic change of the pace is also unlikely.
In India, 60-70% of the total steel is consumed by the construction sector. The sector did not have much activity in the first two months of 2014-15 because of general elections and high inflation. With the new government's thrust on infrastructure, the sector is set to gain momentum after the monsoon season.
"Demand from the automobile sector has, however, started picking up and this is the only good news for steel sector," said a senior official in a private sector steel maker. Indian auto sector has reported healthy growth in the last couple of months buoyed by an improved sentiment.
According to JPC, production of steel during April-August period of current fiscal grew by 0.9% to 36.17 MT from 35.84 MT a year earlier.
Imports saw a whopping 20.7% increase during the period at 3.01 MT from 2.5 MT during the April-August period of the last fiscal. The rise in imports, a source said, is one of the reasons as to why domestic steel makers are forced to hold on the prices even as the cost of fuel and transportation costs were on the rise.
Exports were also up, but on a lower scale. They grew by 8.8% to 2.34 MT from 2.15 MT a year earlier.
