Steel-making raw materials remain a cause of concern

New Delhi : The common wisdom based on a decadal experience is that demand elasticity of steel in emerging economies will stay ahead of gross domestic product (GDP) growth rate. This was particularly evident in China during preparations for 2008 Beijing Olympics and construction of the Three Gorges Dam, when steel consumption grew close to an annual rate of 20 per cent compared with GDP growth rate of 12-13 per cent.

But, much water has flown down the Yangtze river since then and China’s 12th Plan (2011-15) provides for an annual GDP growth rate of seven per cent. Economist Intelligence Unit, however, estimates that China’s GDP will grow nine per cent this year and 8.6 per cent next year. The current plan period, according to China Iron & Steel Association (CISA), will see the country’s annual steel consumption growth slowing down to seven per cent and less as the steel industry undergoes a critical phase of “transformative development", so that common wisdom does not hold good for China any longer!