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Domestic steel consumption growth sees good improvement

Economic Times:  October, 2016

Kolkata: Domestic steel consumption growth has seen good improvement in September with India has been performing better than other countries. The sudden jump in consumption after remaining weak for last several months shows consumption of finished steel improved significantly with 7.6% year on year (y-o-y) growth at 6.7 million tonne (mt). However, on a year to date basis consumption stood at 40.6 mt, up 2.5%. Inventory in the system stands at 6.5 mt, down 1.19% from August 2016, a report by Emkay Global said citing provisional data from the Joint Plant Committee (JPC).

Imports continued to contract, falling 46.2% y-o-y and 1.3% month on month to 611 kt in September 2016. For year to date FY17 too, steel imports fell by 37% to 3.59 mt. Exports on month on month basis, increased sharply by 111% to 655 kt but decreased by 3.7% month on month. For year to date FY17 exports grew by 35.6% to 3 mt.

According to World Steel Association (WSA) short range outlook, global demand for 2016 and 2017 is likely to grow to 1509.6 mt, in 2017 from currently 1498.7 mt, though year to date growth in consumption has remained tepid. Meanwhile, short range outlook by World Steel Association (WSA) has forecast just 0.2% and 0.5% demand growth for crude steel in 2016 and 2017 respectively, due to a challenging environment, geopolitical uncertainty and weakness in investment.

Among the major producers, SAIL witnessed significant rise in production with finished steel production for Sept'16 reported at 998kt, up 54.7% y-o-y and 11.8% month on month. On year to date basis also finished steel production for SAIL increased the highest by 21.2% to 5.7mt.

Finished steel production for the month of September stood at 8 mt, a growth of over 10.5% y-o-y and 7.6% mon on month. For year to date 2017, the same rose by 9% y-o-y to 48.8 mt. SAIL, RINL, Tata Steel India, Essar Steel, JSW Steel and JSPL together produced 4.4 mt for September 2016, a growth of 18.9% y-o-y but down by 4.4% month on month. On year to date basis finished steel production rose 13.4% to 27 mt.