After the very forgettable three
quarters of the current financial year when growth in demand for steel fell
steadily, industry players may now have reason to smile as January figures
point to an upswing in demand.
According to data provided by the
Joint Plant Committee (JPC), demand for steel in India grew by 7.7 per cent in
January on a year-on-year (y-o-y) basis. Although sequentially, the demand
growth has fallen, as in December the country posted 8.7 per cent growth.
An analyst tracking the sector
said, “There is definitely a revival in demand. December and January demand
growth are the highest in the current financial year. The construction and
infrastructure activity is only adding to the momentum.”
During the first six months of
the current financial year, demand for steel had grown by a mere 1.8 per cent.
According to the JPC data, till January India consumed 57 million tonnes (mt)
of steel, a growth of 4.7 per cent over the same period last year.
Primary players such as SAIL,
Tata Steel and Essar Steel have revised prices upwards recently. According to analyst “though demand has been weak and is now reviving, price increases were bold
moves by companies. They are lucky that buyers have accepted the rises and
demand is up.”
Satish Kumar and Saurabh Prasad
of Standard Chartered Equity Research, in a note dated February 9, wrote, “The
Indian long product market has also been doing well, given that many small
producers (DRI-based plants) have been forced to shut because of iron ore
scarcity.”
They added, “In the first week of
January, long product prices were raised by three per cent and in mid-January a
further increase of 1.5 per cent took place. Our channel checks indicate these
increases have been accepted by the broader market. The average long product
price has jumped by around 4.5 per cent to Rs 37,500 a tonne.”
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