India’s steel consumption grew by just 0.6 per cent in 2013-14 fiscal, its lowest in four years, to 73.93 million tonnes (MT), mainly impacted by a slower expansion of the domestic economy and lower imports. 

"India's real consumption of total finished steel was up by 0.6 per cent year-on-year in April-March 2013-14 at 73.932 MT, impacted primarily by the slowdown in the domestic economy and a sharp decline in imports," Joint Plant Committee (JPC), a unit of the Steel Ministry, said in a report.

"The low growth rate in domestic steel consumption indicated that base level demand conditions continued to be weak during 2013-14," it said.

Construction sector accounts for around 60 per cent of the country's total steel demand while the automobile industry consumes 15 per cent. Both the sectors were plagued by a slowdown in the economy which according to the Central Statistics Office estimates grew by 4.9 per cent in 2013-14, against the growth rate of 4.5 per cent in 2012-13.

The previous fiscal was also not that impressive for the steel industry as well with consumption growing by a mere 3.3 per cent on subdued demand due to slackening of the economy and high interest rates.

Steel consumption grew by 5.5 per cent in 2011-12 and 9.9 per cent in 2010-11, according to Joint Plant Committee. The consumption of steel depends on the growth of the economy. A sound economy ensures higher consumption. User industries such as construction and consumer durables had a bad run last fiscal resulting in dip in demand, an industry expert said.

"The demand for steel in March was not good either as it expanded by only 0.7 per cent to 6.738 MT over March 2013, dampened by the impact of the slowdown and a 34.2 per cent decline in imports during this period, which the decline in exports by 23.6 per cent and a modest rise in production for sale (4.8 per cent) could not outweigh," JPC said.

The month-on-month trends however, were different and saw real consumption go up by 10.2 per cent in March 2014 over February 2014, encouraged primarily by a supply-side push as both productions for sale and imports recorded strong growth though exports also shoot up by 33.6 per cent.

Tata Steel Managing Director T V Narendran recently said India's steel consumption is likely to grow by 5-6 per cent in the current fiscal. However, his assumption is based on the projected 5-7 per cent economic growth of the country.

"Typically, steel demand grows by 1.2 to 1.3 per cent of the GDP growth. If the GDP growth is 5 per cent, I am expecting demand should grow by 6 per cent," he had told PTI in late March.

In the last two fiscals, this thumb rule did not materialise though.