India to start a period of strong steel demand in 2018

Steel demand has increased several times in India in recent months. According to the April and May report, total steel consumption is 8.5% higher than last year.

The strength of domestic demand means that even as steel production rose 6.1%, exports fell as producers found buyers at home. Rolled steel producers benefit more from local sales, earning more compared to export. Over the past two months, imports have actually grown by 14.8%.

The growing demand doesn't seem like a one-off. The last quarter of the last fiscal year also saw an increase in demand, amounting to 7.9% for the whole year. However, demand growth in the first nine months was relatively low at 5.2%.

One of the reasons for the growth in domestic demand is the growth in car sales. For example, the first three largest commercial companies in India saw their sales in May grow 50% more than a year ago, with a similar increase in April. While cars mainly use sheet metal, other steel products have dropped sales due to a slowdown in end-use sectors such as real estate and industrial projects.

Industrial steel consumption in India shows that construction and infrastructure account for just over two-thirds of the total, with no more than 10% in the automotive industry, with the remainder going to other sectors. Construction and infrastructure are vital to steel demand and there appears to be a recent recovery in this segment.