Steel needs a consumption boost first and purchase preference second
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Domestic steel makers may get preference in government projects, according to reports. That should give them protection from cheaper imports, but they are doing a good job of chasing imports out already. In February, domestic steel output rose by 12.9% from a year ago to 8.84 million tonnes, as large private steel producers such as Tata Steel Ltd and JSW Steel Ltd ramped up output. Imports dropped by 46%; in April-February, they fell by 38.5%.
A bigger concern is weak consumption growth. It was a mere 3% in February and is showing a declining trend. Steel makers have been forced to export more, with overseas shipments up by 78% in the fiscal year till February. The government can do more by doing all it can to boost consumption in the first place.