India's steel demand to grow by 5.4% to 83.8 MT in 2016: WSA

Steel demand in India is expected to grow by 5.4 per cent to 83.8 million tonnes (MT) this year on the back of low oil prices, reform momentum, the World Steel Association (WSA) said today.

The global industry body has also forecasted that demand in the world's third largest producer will again grow at 5.4 per cent to 88.3 MT in 2017.

"India's prospects are brightening due to low oil prices, the reform momentum and policies to increase infrastructure and manufacturing output. India's steel demand will increase by 5.4 per cent in both 2016 and 2017 reaching 88.3 MT in 2017," WSA said in a statement.

With the integration of China in the global manufacturing supply chain, steel sector has slowed as a consequence of weak growth in global trade.

Manufacturing exports in emerging economies, particularly Asia, declined owing to slower Chinese demand. The same is true for developed countries experiencing a reduction in the exports of consumer goods and machinery, it added.

Mechanical machinery, metal goods and other transport sectors are weakening, but the automotive sector will maintain its growth momentum supported by strong demand in many countries, WSA said.

"Outside China the construction sector is expected to maintain its mild, but steady recovery momentum particularly in India, the MENA and ASEAN regions," it noted.

Globally, WSA has forecasted steel demand to decrease by 0.8 per cent to 1,488 MT in 2016 following a contraction of 3 per cent in 2015.

In 2017, the world steel demand is expected to return to growth of 0.4 per cent to reach 1,494 MT, it added.

Commenting on the outlook, World Steel Economics Committee Chairman TV Narendran said the economic environment facing steel industry continues to be challenging with China's slowdown impacting globally across a range of indicators contributing to volatility in financial markets, sluggish growth in global trade and low oil and other commodity prices.

The global steel market is suffering from insufficient investment expenditure and continued weakness in the manufacturing sector, he added.

"In 2016, while we are forecasting another year of contraction in steel demand in China, slow but steady growth in some other key regions including NAFTA and EU is expected. Growth for steel demand in all markets except China is expected in 2017," Narendran said.

The decline in steel demand in China is expected to be 4 per cent in 2016 followed by 3 per cent in 2017. This suggests a demand of 626.1 MT (15 per cent down from 2013) for 2017. In 2016 demand is expected to be 645.4 MT.