India is the only major economy whose steel consumption is expected to grow in 2009, according to World Steel Association (WSA), representing approximately 180 steel producers, including 18 of the world's 20 largest steel makers.

Recently, the world steel body reviewed the forecast for 2009 and found that within the North American Free Trade Agreement (Nafta) region, the US was expected to show the biggest decline in steel demand in the post-war period. Apparent steel use is expected to fall by 36.6 per cent.

Japan will be also affected due to a sharp decline in exports by its steel-using industries, especially automotive and machinery, with steel use expected to come down by 20.4 per cent.

Emerging economies are likely to be less affected by the economic crisis. While steel demand in Brazil, Russia, India, and China (BRIC) as a whole is likely to contract by 5.9 per cent, India would see a growth of two per cent in 2009. The steel guzzler, China, is likely to record a decline of five per cent on the back of the economic crisis, coupled with a slowing domestic economy. The last time that China registered a drop in apparent steel use, was in 1995. Apparent steel use for the world, excluding China, is expected to decline by 20.4 per cent in 2009.
 

According to WSA, the worldwide apparent steel use is expected to decline by 14.9 per cent to a little more than one billion tonnes in 2009, after declining by 1.4 per cent in 2008.

Industry observers said that it was not surprising that India would grow despite a decline in the rest of the world as per capita consumption was very low in the country.

India's per capita consumption at 38 kg is predominantly for domestic use. According to Fitch Ratings, margins for steel makers would remain under pressure in the calendar year 2009 though falling input cost was likely to provide some downside protection.

The rating agency has also pointed out that despite the slowdown, none of the steel majors had cancelled their existing capex plans in India. While brownfield expansion was on track, delays in greenfield projects could actually mitigate the demand-supply mismatch.

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