New Delhi: The Economic Survey today projected domestic steel consumption to grow in the range of 6-9 per cent in 2010 primarily on the back of improved demand from construction and automobile sectors.
“Indian steel outlook for 2010 continues to be positive, since Indian steel consumption is expected to be rising at 6-9% during the current year, on account of higher demand from the real estate, construction and automobile sectors,” the Survey tabled in Parliament said.
However, the projected growth volume was not mentioned.
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Steel consumption for April-January period has risen 7.9% to 45.93 million tonne over the same period in 2008- 09, a fiscal which saw demand as well as prices of the commodity falling by more than 50% in the second half.
“However, recovery gathered strength during 2009-10 and the Indian steel industry appears to have successfully overcome the effects of the global economic slowdown,” the Survey added.
Domestic steel companies including Sail, Tata Steel, JSW saw their production surging to pre-slowdown levels and steel prices also maintained an upward trend on the back of firming demand and rising input cost pressure.
“The strong growth in GDP in the second quarter of the current fiscal and the Index of Industrial Production (IIP) during April-November 2009 suggests that the demand side of the steel industry is back on stable footing. The IIP in April -November stood at 7.7% against 0.6% in the year ago period.
India ranked as the fifth largest producer of crude steel
in the world during January November 2009, Survey added.
It stated that the growing demand created the need for new steel production capacities in the country, a phenomena which saw steel output rising 7.1% in four years ended 2008-09.
“The increase in production came on the back of capacity expansion, mainly in private sector plants and higher utilisation rates,” it added. Among the private companies, Tata Steel, JSW augmented their production capacities.
The government plans to ramp up its annual steel production capacity to 120 million tonnes by 2011-12, marginally lower than the earlier projection of 124 million tonne.
The revision was on account of the state-owned SAIL revising its targeted annual production capacity to about 23 million tonnes for 2011-12 from earlier estimated 26 million tonnes, mainly on account of regulatory hurdles.
Such regulatory hurdles and problems in land acquisition are hurting growth projects of steel makers like Posco and ArcelorMittal too. This may lead to downward revision of the 120 MTPA capacity addition target of 2011-12 as well.
To sort out such issues the government has formed an Inter-Ministerial Group which will facilitate interaction between the investors and the agencies involved.
“An Inter-Ministerial Group has been set up to facilitate interaction between investors and the various agencies in matters of acquisition of land, mining rights, power and transportation including the rail, road and port sectors,” the pre-budget document stated.