According to ICRA Ltd., the local branch of Moody 's Investors Service, steel consumption growth in India is likely to fall below the 6-7% projected earlier this fiscal year. And this is the slowest growth rate since 2017.
Indian steel companies have come under pressure from a weakening auto market this year. Tata Steel, the largest steelmaker, fell to a 2-year low in the first quarter, while its rival JSW Steel Ltd. fell by more than half as the Asian country's shadow banking crisis caused cash shortages and slowed economic growth to a 5-year low.
The S&P BSE Metal Index has also dropped 30% this year, the largest drop among 19 industry indices on the Bombay Stock Exchange, reflecting a sharp slowdown in the economy, mainly due to lower car sales in July and production cuts in the infrastructure sector.
However, steel consumption in India is likely to outpace global growth, which the World Steel Association predicts to increase 1.3 percent in 2019.
According to the Ministry of Steel, steel demand in India in the last fiscal year was 97.5 million tons, up 5% over five years, mainly due to the government's desire to stimulate infrastructure development.
Indian Finance Minister Nirmala Sitharaman announced on Friday a series of measures aimed at reviving the economy, including the provision of concessional loans for the purchase of cars. However, economists, financial leaders, industry leaders and local media question the effectiveness of these measures in the absence of any significant financial support.
