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While global steel demand forecasts have been scaled down, India’s growth is expected to increase. Photo: Bloomberg
While global steel demand forecasts have been scaled down, India’s growth is expected to increase. Photo: Bloomberg

India’s steel demand: a cloud and a silver lining

India's steel demand was in line with the 2017 forecast and demand is expected to increase by 5.5% in 2018 and 6% in 2019

One of the determinants of the steel industry’s health is demand and while prices may have risen in 2017, demand fell short of expectations.

Global steel demand came in at 1,587 million tonnes, according to the World Steel Association’s April short range outlook report, falling 2.2% short of its October prediction of 1,622 million tonnes. That has led to a 2% paring of its 2018 forecast to 1,616 million tonnes. The main reason for the cuts is lower-than-expected demand in China, which is forecast to decline in 2019 also.

Weaker global steel demand could be a concern, especially as it comes during a year when the US wants to restrict steel imports. Recent news reports indicate that after the winter cuts, Chinese steel mills are ramping up output. India too is seeing higher output.

On the brighter side, India’s domestic steel demand is in good form. It was in line with the 2017 forecast and demand is expected to increase by 5.5% in 2018 and 6% in 2019. That makes India the fastest-growing market for steel among top 10 largest steel markets by volume. While that gives domestic companies an edge, higher domestic supply also means exports will continue. That leaves them exposed to the risks of slowing demand and its effect on steel prices.

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