Saturday, July 02,
Slowdown in the growth of steel production reflected in the Index for Industrial Production in May mirrors the tapering demand from sectors such as power, infrastructure and real estate, which have been burdened by high cost of fund.
Growth in steel production moderated to 6.1 per cent in May compared to 9 per cent in the same period last year. The growth halved to 5.5 per cent (10.9 per cent) between April and May.
India’s crude steel production rose by just 0.3 per cent in May, after declining 1.7 per cent in April, the World Steel Association had said. On a sequential basis, however, steel production in May improved by 2.5 per cent.
Mr V.S. Seshagiri Rao, Joint Managing Director and CFO, JSW Steel, said, “One should be happy that the industry has managed to register a growth in steel production. The IIP numbers reflect the policy initiative taken by the Government to control inflation. Interest rates have gone up after the RBI hiking key banking rates”.
Though the steel demand slowdown was more pronounced in the infrastructure sector, others such as automobile and realty sectors are also trimming down their output, which had resulted in lower steel output, he said.
The RBI has marked up key rates 10 times since March 2010 to tame inflationary pressures and has expressed its desire to sacrifice some growth to rein in inflation.
“Taking the signals from RBI, most banks have increased the lending rates making it difficult for corporates to execute their expansion plans. Besides, the slowing automobile and white good sectors have hit steel demand,” said an analyst.
Source: The Business Line
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