MUMBAI (Commodity Online): India’s largest steelmaker by local capacity, Steel Authority of India, predicted that the country’s steel consumption will rise 5%-6% in 2009, while production is expected to rise 4%-5%.

While talking to mediapersons in the capital city of New Delhi, SAIL director Shoeb Ahmed said steel demand has been buoyant in recent months on the back of rising infrastructure spending and a revival in demand from auto makers. Last year, consumption and production levels were roughly balanced.

Despite strong demand in India, steel prices are likely to remain stable in the short term, as the outlook for the steel sector in Europe still remains weak, he said.

However, it is difficult to predict how long this period of stability will last.

India’s leading steel companies raised prices of flat products for the second month in a row in September due to demand from auto makers and a recovery in global prices.

Local prices of long products, however, have remained stable because a significant shortfall in annual rains has slowed spending on construction-related activities in rural areas, where income is heavily dependent on rain-fed agriculture. Long products are used to make houses and buildings.

SAIL said in a statement that it sold 14% more steel in the July-September quarter than in the same quarter a year earlier.

The company sold more than 3.0 million tonnes of steel in the fiscal second quarter. Sales of flat products rose 13%, while long product sales rose more than 14%.