India's steel demand to rise in H2 with uptick in automobile and infrastructure sectors

The steel demand in India is expected to accelerate after the completion of monsoon season as construction activities will see a pickup in pace," Care Ratings said on Friday.

The consumption is expected to grow by five to six per cent on the back of government's expenditure towards infrastructure and construction. With the same government coming to power, the focus will continue to remain on infrastructure development in the country, it said in a report.

"An uptick in construction activities post-monsoon season will result in higher steel demand which in turn is expected to bring some relief to long steel products' prices on a month-on-month basis. Also, likely recovery in automotives industry during the second half of FY20 is expected to provide some support to the flat steel products' prices sequentially," said the report.

However, the finished steel production growth is likely to decelerate to three to four per cent. This is because no major capacity is expected to come up from large steel players while the small steel players are estimated to increase their output at a rate similar to last year.

The price increase going forward however is expected to be moderate. Resultantly, the prices of flat products are expected to decline by four to five per cent and that of long products are likely to fall at a slower pace of two to three per cent during FY20 on a yearly basis.

Overall, crude steel production in the country increased in each of the last five years during FY15 to FY19 among the top five steel producers in the world. The output for other top four countries -- China, Japan, the United States and South Korea -- declined for one year or more than one year during the past five years.

In 2018-19, India gained the second position in world crude steel production exceeding Japan. Of the total 1,804 million tonnes of steel produced during the year, more than half of the steel output came from China that stood at 945 million tonnes representing its dominant position in world steel production.

This was followed by India and Japan with steel output at 106 million tonnes and 103 million tonnes respectively, said Care Ratings.

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