Trends in the Iron and Steel Sector in India

Trends in the industry growth in the iron and steel sector in India have been encouraging over the last few years. There are several factors that support growth in this industry such as competitive advantage, policy support, increase in investments and robust demand.

Growth Estimates and Other Factors :-

It is estimated that steel consumption domestically would increase by about 230 MT and in the last financial year 2017-18, it has grown to 90 MT. Demand would support its growth in the domestic market.

Over the last two years, there has been a consolidation among players in this sector. Also, entities from other segments have also been investing in the country. Consolidation could also have global players invest in the market.

Global benchmarks have been put in place by the National Steel policy of 2017 for which industry is expected to produce as per global standards.

There is also a competitive advantage that the country has. There are reserves still abundant of iron ore in the country as well as low-cost manpower availability. That keeps the sector competitive for the country in the global forum.

Demand Estimates in 2019 :-

As per industry updates, in April 2019 it is forecasted that demand in this segment would slow to a steady pace of 7.2%. The decline in demand is an off-take from the segments which utilize steel products such as automotive or consumer durables. The demand slows down was announced by Indian Steel Association. This slow down is predicted for the upcoming two fiscal years. That is also because consumption is predicted to slow down in the segments which use steel. Demand for the same had grown to 8 percent last year. This sector performs in a manner different from the online entertainment segment; here demand continues with increasing Indian users logging in to play online games such asLeo Vegas Mega Moolah jackpot and others.

Even with the slowdown of demand, the consumption would cross about 100 million tones. There is an expectation that steel consumption would cross 103 million tones as per prediction by the World Steel Association. Hence, steady growth is predicted, from 96 mt which was logged for 2018 and it would move to 110.2 mt by the year 2020.

Factors for a Slow Down in Demand :-

There are several factors that contribute to demand for steel; the automotive sector is significant here whose demand has gone soft since October last year. As per base effect and recent trends, growth is slowing down for automotives in 2019 though a revival is expected in July when pre-buying would be encouraged before the norms of BS-VI kick in.

2018 saw strong growth in consumer durables for which steel demand also grew. Sales in the refrigerator, washing machine, air conditioner were boosted since GST rates were slashed. From figures such as 22 percent in consumer durables to 16 percent in automotive which were clocked in 2018 is predicted to be down by seven percent. The automotive sector also makes a demand in intermediate goods moderate since demand in this sector is driven by both consumptions as well as by investments.

Indian economy growth showcased a slow down last year in the second half due to several factors. These were high prices in oil, the rupee depreciating in value against the dollar and rural demand is weak.

Conclusion :-

It is expected that the economy would revive only with private investments which would be supported by consumption demand. This would be improved by extending concessions to farmers, government employees as well as the unorganized sector. However, in a cumulative manner economy would sustain a growth rate of 7 percent in the coming years.