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What impact has demonetization had on steel consumption?

In November, it rose by 3.8% over a year ago, much better than October when it declined by 1.4%, shows data from the Joint Plant Committee.

Sequentially, however, consumption has declined more than it did in October.

Growth in consumption can be partly explained by sales under existing contracts, which implies that December could see a reversal.

In fact, production is showing signs that this could happen, as output in November grew by 5.8% over a year ago, compared to 13.6% in October.

A large part of this deceleration is owing to Steel Authority of India Ltd’s output declining, while large integrated steel plants in private sector saw it increase.

Sequentially, however, both public sector and large plants have seen output decline in November.

The uptrend in steel prices and rising exports are mitigating factors for the industry.

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