Steel demand in India to grow at 8.6 percent in 2023: Worldsteel

New Delhi: The demand for steel in India is expected to grow at a healthy pace of 8.6 percent as compared to the overall global increase of 1.8 percent in 2023, the World Steel Association said on Tuesday. The association further projected that global demand for steel would increase by 1.8 percent in 2023 and touch 1,814.5 MT. Notably, global steel demand dipped by 3.3 percent in 2022, said the official release.

The Association stated that in 2024, the demand will see an increase of 1.9 percent to 1,849.1 MT, the World Steel Association (Worldsteel) said, in an official release.

For India, the global body said, "after a growth of 9.3 percent in 2022, steel demand is expected to show healthy growth of 8.6 percent in 2023 and 7.7 percent in 2024."

Indian economy will continue its high growth momentum: Worldsteel

The body further noted that the Indian economy continued to remain stable against the pressure of high interest rate environment, and the steel demand is expected to continue its high growth momentum. India's construction industry growth is being led by government spending on infrastructure and recovery in private investment the association noted in its Short-Range Outlook (SRO). The capital goods sector is expected to grow on account of investment on infrastructure.

The report stated that the automotive sector is set to witness a healthy growth momentum while the consumer durables sector is the only sector that is underperforming due to higher inflation, interest rates that constrain discretionary spending.

However, this sector will see improvement in 2024 due to festive season spending and progress in the Production Linked Investment (PLI) schemes.

Steel demand has been feeling the impact of high inflation and interest rate environment: Maximo Vedoya

Maximo Vedoya, Chairman of the Worldsteel Economics Committee said, steel demand has been feeling the impact of high inflation and interest rate environment. Since the second half of 2022, activities of steel using industries have been cooling sharply for most sectors and regions as both investment and consumption weakened. The situation continued into 2023, particularly affecting the EU and the US.

Considering the delayed effect of the tightening monetary policy, the body expects steel demand recovery in 2024 to be slow in advanced economies. Emerging economies are expected to grow faster than developed ones, he said.

"We expect the situation in China's property market will stabilise in the latter part of the year and its steel demand will record slight positive growth thanks to government measures. The 2024 outlook for China remains uncertain depending on the policy directions to tackle the current economic difficulties. We note that the Chinese economy is in a structural transition phase that may add volatility and uncertainty." he added.

"Other uncertainty is linked to regional conflicts and unrest such as in Russia and Ukraine, Israel and Palestine, and elsewhere. This could contribute to rising oil prices and further geo-economic fragmentation, both of which are downside risks," Vedoya said.

 It is worth noting that despite the weakening of construction activities due to high-interest rates, infrastructure investment is showing positive momentum in many regions, even in advanced economies, reflecting the effect of decarbonisation efforts, he said, the official release concluded.

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