India-based CARE Ratings expects that India’s annual finished steel production growth in the financial year 2019-20 starting on April 1, 2019, will decelerate to 3-4 percent as no major capacity is expected to come on stream from large steel players, while small steel players are estimated to increase their output at a rate similar to last year. However, this forecast is considered to be optimistic given an annual growth of 1.4 percent in finished steel production in the April-May period this year compared to 4.3 percent in the last financial year and an annual growth of 2.7 percent crude steel production in the April-July period this year compared to 10.6 percent in the last financial year.
Regarding finished steel consumption, the agency expects the country’s consumption to grow 5-6 percent in the current financial year, on the back of the government’s expenditure on infrastructure and construction. However, this is considered to be too high as in the April-July period this year India’s finished steel consumption increased by 5.7 percent compared to a 9.2 percent in the same period of the previous financial year. SteelOrbis understands that consumption growth slowed down more rapidly than production, forcing Indian steel suppliers to turn to the export market, especially in billet which is not a traditional export product.