India’s future steel consumption growth is unlikely to replicate the steep pattern seen in China since 2000. This is because India is more service-oriented and inward-looking, more environmentally conscious with a stronger focus on equity, and less controlled by a strong central government, according to worldsteel’s Adam Szewczyk.

India has huge potential considering its huge population and still low-level of infrastructure and housing development. However, it is likely to show an S-curve – the relationship between per capita income and per capita steel use – which will be less steep than that of China.

“However, the other side of the coin might be that it will take longer for India’s steel demand to peak compared to China – China’s steel demand has increased dramatically since 2000, but then peaked in 2013,” says Szewczyk, worldsteel’s Head, Economic and Statistical Analysis.

In recent years Indian steel demand growth has been hampered by the so-called demonetisation intended to scrap black money and counterfeiting, as well as the introduction of the Goods and Services Tax (GST). Moreover, sluggish private investment resulting from a highly leveraged corporate sector has curtailed growth.

Nevertheless, in the past decade India’s steel demand has been growing on a par with Gdp: during 2001-2016, Gdp grew at 7.34% and steel use at 7.43%. “While India is already one of the fastest growing economies in the world with its Gdp set to increase above 7% in the next two years, according to the IMF, we can expect India’s growth potential to be enhanced over time as India makes more and more reforms,” Szewczyk says in a note seen by Kallanish.