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The World Steel Association revised their global demand estimates upwards, on back of increasing China demand growth, to 2.1% from 1.8%. Despite an increase in raw material prices, the production in China has continued to grow with Finished Steel prices also softening over the past quarter. The winter cuts on the anvil need to be watched closely as the Chinese government tweaked its policy by allowing local authorities to set their own anti-smog measures instead of blanket cuts on all crude steel production across the nation. The continuing US-China trade tensions as well as initial signs of sluggishness in China’s economy could well pose a risk to the Global Steel outlook.
India remains steadfast in its Steel demand growth, backed by Government spending in infrastructure, roads, rails, transmission and housing. The growth in housing demand is now more widespread with pick up in villages & tier-2/tier-3 cities & towns balancing out the listlessness in big cities.
With continued measures by the government to protect the Steel industry, the outlook for the domestic steel demand remains robust with Steel demand growth expected to outstrip the capacity additions in the coming years. The recent happenings in the financial sector which have further drained out the liquidity in the markets though could pose a near term risk to the demand. On the back of the infrastructure spend by the government and possible fall in personal consumption due to liquidity concerns, outlook on the long products’ demand is expected to be better than flat products in the near term.