The Eurozone crisis and an overall global economic slowdown does not appear to be a major impediment to growth of India’s steel sector. The country’s demand for steel expected to grow by 6.9% in 2012 and further to 9.4% in 2013 owing to rapid urbanization and growing infrastructure investment. In fact at 6.9%, India’s demand for steel will be almost double the global growth rate. This was stated by researcher World Steel Dynamics in a recent report.

According to the report, globally there is a slump both in steel prices and capacity utilization. While the prices for hot rolled steel have fallen by 12% since February 2012 and a further drop in price is expected. Capacity utilization is also down to 76% from 80%.

Slowdown in particularly marked in two main regions – Europe and China. Public infrastructure and construction projects across the Eurozone have virtually ground to a halt to the extent that many major producers are shutting down plants and shedding excess capacity. Germany’s ThyssenKrupp AG, for example, is trying to sell its loss-making sheet-metal plant in Alabama, while Arcelor-Mittal has closed a Belgian plant and is idling some of its other plants.

Meanwhile, overproduction in China has begin impacting margins as supply exceeds demand and huge surplus stocks are being created. Reports suggest that fresh imports of iron ore are being rejected due to lack of storage space in ports.

The China Iron and Steel Association says that the growth in demand for steel fell to 8% in 2011, and following the government measures to control domestic property markets, is expected to further dip this year by another 4%. As many as 41.2% of Chinese firms reported losses during Q1 of 2012 representing a 23-fold decline from last year.

Other analysts are stating that world steel annual output and demand has reached a plateau at about its current level of 1.5bn-1.6bn tonnes, and that the huge year-on-year increases in steel demand that were seen earlier are now a thing of the past.