India’s steel consumption increased by a mere 0.7 percent to 18.82 million tonnes during the first quarter of current fiscal as compared to 18.69 million tonnes in the same quarter of previous fiscal year. Domestic crude steel production grew by 1.5 percent at 21.86 million tonnes in Q1FY15 over the same period last year. The major steel producer such as Tata Steel, SAIL, RINL, Essar Steel, JSW and JSPL together produced 11.34 million tonnes in Q1FY15, registering a growth of around 2 percent. The production of mini and small steel firms rose by 0.3 percent during the period from a year earlier. Steel imports spurted by 11.8 percent to 1.49 million tonnes, whereas, exports increased by 18.5 percent to 1.34 million tonnes during the reported month.
India is the fourth largest steel maker in the world with 81 million tonnes of production in FY14. The performance of steel industry is highly correlated to overall economic growth as steel demand is derived from construction and automobile sectors. Construction sector accounts for around 60 percent of the country's total steel demand, while the automobile industry consumes 15 percent of demand. The steel industry contributes about 2 percent of the country's GDP and employs over six lakh people.
Over the past two financial years, Indian steel industry is struggling with slowdown due to the weak steel demand. India’s finished steel consumption grew at a four-year low rate of 0.6 percent to 73.93 million tonnes in FY14 mainly impacted by a prevailing economic slowdown and high interest rates. Along with weak demand, high input cost due to increased prices of raw material, such as iron ore has also become a main concern for domestic steel players, impacting their margins. Steel Ministry estimates that India's consumption may go up to 176 MT by 2025-26 if the economy grows by 6.5 percent during the period between 2014-15 and 2025-26.
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