Steel Demand From Automobile Segment To Rise: Study

The rising demand for steel from the commercial vehicles segment is being seen as a sign of speedy industrial revival by the steel industry.

Instead of basing demand projections on usual parameters of economic and industrial growth, a recent study by the regional development commissioner of iron and steel here, taking the `end-use method, predicts a progressive rise in use of steel in the automobile industry.

The study, titled `Consumption of iron and steel in automobile sector: Project for 2000 AD, also infers a rise in industry-related activity from the increased steel consumption and demand patterns witnessed in light commercial vehicles (LCV) and other utility vehicles.

 

The consumption of iron and steel for LCVs grew by about 31 per cent during 1995-96 and is slated to touch about 50 per cent by the turn of the century, according to the report submitted to the Union steel ministry.

The automobile sector, which witnessed spectacular growth in the 90s, could well be used as a barometer for steel consumption in the years to come, the report suggests. Total consumption of iron and steel in the automobile sector has been projected at more than 1.5 million tonnes in the year 2000 against the 0.8 million tonnes recorded in 1994-95.

Normally, the demand projection for any manufactured item is based on economic parameters like industrial growth, and based on this respective industries plan future strategies like how much to manufacture and at what capacity utilisation to do it.

The present study makes an attempt to assess the demand by `end-use method and has an advantage of basing projections on realistic figures as the assessment is based on actual iron and steel consumed per unit product of the user industry, sources in the ministry said. The study, however, projects a decline in consumption of steel in case of tractors from 30.8 per cent in 1995-96 to 26.18 per cent in 2000.

It has projected demands for various categories of steel items like castings, hot rolled and cold rolled coils and wire rods which are mainly used in the automobile sector.

However, industry sources said the actual demand can exceed these projections.

as steel consumption in the unorganised sector had not been taken into consideration.

Lots of bus and truck bodies are manufactured by the road side manufacturers for which no official data is available, they said, adding this could be somewhere between 20 to 25 per cent of the total consumption.