Sales for India’s steel industry — a key indicator of growth — are expected to rise between 7% and 9%, industry executives said.
Executives say government spending on infrastructure, and a housing boom, are expected to bolster consumption in the rest of the 2012 fiscal year, which began in April. Government data shows that during the April-August period, consumption increased by only 1.3% to 28.05 million tons.
The slowdown was attributed to a drop in demand from the once-robust auto sector. In addition, monsoon rainfall since June slowed down activity in the construction sector.
Essar steel plant in Gujarat, India. Source: Essar
Construction growth is being driven by massive government spending on infrastructure as well as a boom in the housing sector, while the auto sector is expected to be strong in the October to December period, the country’s traditional festive season.
Steel demand in India is considered to be a key indicator of economic growth in the country, with a close correlation between steel demand and India’s economic growth rate.
“Since India’s gross domestic product is widely expected to be between 7.5% and 8%, steel demand is likely to grow by around 9% or more,” Vikram Amin, the marketing director at the steel division of Essar Group.
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