India’s steel consumption to cross psychological 100-million tonne mark in 2019, Auto News, ET Auto

India’s steel consumption to cross psychological 100-million tonne mark in 2019, Auto News, ET Auto

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

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

“Consumption growth is expected to improve driven by measures for farmers, unorganized sector and government employees. Cumulatively, the Indian economy is likely to maintain above 7% growth in next couple of years,” the statement said.

While the economy witnessed a strong growth of above 8% during 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 construction, capital goods & Railways are likely to maintain the healthy growth momentum driven by infrastructure projects such as Bharatmala, Sagarmala, Railway track electrification, dedicated freight corridors, metro rails, etc.

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

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

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

“However, revival is expected 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 durables sector is projected to normalize from a strong growth in 2018, which was mainly driven by GST reduction in AC, washing machine & refrigerators. Both automotive and consumer durables sectors are estimated to grow at near 7% in next couple of years,” the ISA forecast added.

Intermediate goods which is 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 continue to grow at a stable pace. Overall the sector is likely to grow by 6-6.5% in next couple of years, ISA said.

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