Economy

India set for record steel consumption as economy revives

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India’s steel consumption is set to break records this year, reversing the performance in 2020 when demand crashed as the pandemic upended economic activity.

Economic activity in the country has revived as a deadly second wave of infections abates. The International Monetary Fund expects India to grow 9.5% this year. That’s in contrast to last year, when the economy tipped into an unprecedented 7.3% contraction, as a nationwide lockdown brought the country to a standstill.

Demand for steel is expected to surge 17% to 110 million tons in the year started April, according to Seshagiri Rao, joint managing director of JSW Steel Ltd. Consumption of steel in 2020 fell year-on-year for the first time in at least a decade-and-a-half.

Rising power consumption and mining activity, along with higher tractor and passenger vehicles sales is pushing up demand for the metal, Rao said in an interview.

“We have seen a good revival in the month of June and July,” he said. “Construction demand will also pick up after the festive season.”

That’s likely to impact exports, which jumped to 17 million tons last year. Shipments will fall slightly below that level this year as steelmakers divert more supply to meet local demand, Rao said. JSW’s exports will remain steady at the 4 million tons shipped last year, he said.

The company, which reported its best quarterly profits in the three months through June, said higher volumes and growing local demand are helping the company offset rising input prices.

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