The demand for steel in India is growing with the growth of public expenditure
Domestic demand for steel in India started to recover, and it is expected that in the coming months, sales will continue to gain momentum, say the heads of major steel mills of India on the sidelines of the annual conference of the Indian steel Association in Delhi.
steel Producers raised prices after several months of stagnation, during which the market remained at the same or lower level, and traders are now looking to build up stocks in anticipation of rising demand.
Plants increased rebar prices at 1200-1300 rupees (17-18 USD) per ton, while prices of hot-rolled steel increased by RS 500 this month, said Anil Choudhary, Chairman of the state manufacturer Sail.
"In the near future export prices for hot rolled coils in India can grow to $ 20 per ton," said Chaudhary.
In the last few days the offer of hot rolled steel were at 452-453 per ton, compared to $ 410 last month.
the steel Producers attributed the change in steel demand with increase in government spending over the last month.
Major projects, such as laying steel pipelines to deliver river water to cities in southern States of Tamil Nadu, Telangana and Andhra Pradesh, the expansion of naval and commercial shipbuilding and the construction of pylons, raised the demand for steel, says the Director of Jindal Steel V. R. Sharma.
the State monopoly of India Railways (rail Corporation) is planning to procure 1.7 million tonnes of steel in the 2019-20 fiscal year, which began April 1. JSPL plans to deliver about 400,000 tons of this product and the rest will be supplied by Sail.
"Traders are stocking up on food, because in the near future they will be faced with higher prices," said Sharma. Jindal Steel has raised prices on most of its products to approximately 1,000 rupees per ton this month.
"Demand for steel this month is much better than last month," said joint managing Director of JSW Steel limited in the private sector Seshagiri RAO.
infrastructure Spending continues to be slow, but they can accelerate in the next six months, since Delhi, it seems, is keen to promote projects such as dedicated road corridors for trucks and highways, said Bahl Tushar, senior Manager at Larsen & Toubro (L &T). L &T is the largest construction company of India in terms of sales.
the Problems in 2019
for the most part this year, spending on infrastructure in India slowed sharply, which led to an increase in unpaid bills among companies that sell steel, and contractors working on publicly funded projects. The construction industry accounted for about 65% of domestic steel consumption, including infrastructure and real estate, making it critical to the state of the metallurgical sector.
Demand for property remains slow, although the package cost 250 billion euros for the resumption of the intense housing projects have raised expectations of a recovery in the sector.
But any recovery in demand may take more time. "Government spending is not the button that you press and it immediately activated," said chief financial officer manufacturer Tata Steel Kushik Chatterjee.
the Cost of industrial infrastructure in areas such as warehousing, has grown significantly, but spending on infrastructure funded by the government, still slow. According to Chatterjee, government departments is likely to increase costs to cover their budget expenditures, as the financial year 2019-20 coming to an end.
According to Ahmed S. Firoza, steel industry analyst and former chief economist at the steel Ministry, the government's ability to raise funds for infrastructure spending remains limited, although new Delhi is trying to raise money by selling stakes in public sector companies.