MUMBAI (Commodity Online): The Steel Authority of India Ltd (SAIL) has cut India’s steel demand growth by 50% for 2012 as weak demand continues to plague the industry. SAIL had earlier forecasted a 10%-12% demand growth in 2012, but has currently toned it down to just 6%.
"Right now demand is slightly sluggish. Let's hope it improves”, Shuman Mukherjee Director of commercial at SAIL was quoted by Reuters. SAIL is the largest steel producer in India. It is also the second largest producer of Iron-ore.
The Indian steel sector has been suffering in an environment of high interest rates and weak demand especially from the automobile and construction sectors. In fact, car sales dropped a staggering 23.8% in October, the biggest in more than 10 years! The construction sector meanwhile has not exhibited the strength expected by the markets.
The economic outlook is also not looking convincing with the RBI cutting down the GDP growth. The depreciation in the value of the Rupee also adds to the problems since input costs go higher when raw materials are sourced from abroad.
As of November 18, NCDEX Steellong November contract is trading up by 3.42% for the month.
