ICRA forecasts slow down in global steel growth in 2007

02 Feb 2007

New Delhi: Dampening the enthusiasm of the cheerleaders of Tata steel's acquisition of Corus, a report on the steel sector by ICRA indicates a likely softening of the growth in global steel consumption.

According to ICRA, the slowdown in growth could be a significant 5.2 per cent in 2007 from a healthy 8.9 per cent in 2006. "The world steel consumption growth is expected to slow down from 8.9 per cent in 2006 to 5.2 per cent in 2007 and 4.2 per cent in 2010," the ICRA industry monitor said.

The ICRA report said the decline in growth would mainly be caused by China, where the rate of consumption increase is likely to drop from 14.4 per cent in 2006 to eight per cent in the next four years.

In India, the growth in consumption would come down marginally in 2007 to 9.1 per cent from 10 per cent in 2006.

The major drop in the growth would come from the European Union and the NAFTA region. According to the report, the EU is likely to see a negative growth of 1.1 per cent in 2007 as against positive of 8 per cent in the previous year. Similarly, the NAFTA region may see a de-growth of 0.7 per cent from a positive of 8.7 per cent.

The ICRA industry monitor said the volatility was likely to continue in prices, which would be governed by the cost of raw materials. "High steel prices have also been driven by significant increases in prices of inputs, especially iron and coal," the report said.

The Tata Steel share's had declined by over 10 per cent yesterday on the announcement of the Tata`s acquiring Corus on apprehensions of the deal being "over-valued", to which Tata Group chairman Ratan Tata had said that the market was taking a short-term view.