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Int'l steel demand may dip in 2007

Tata Steel share has lost over 10 per cent after market analysts described its Corus deal as "over-valued".

india Updated: Feb 02, 2007 17:49 IST

As the share market displayed its concern over Tata Steel "over-valuing" Corus at $12.1 billion, an industry report has indicated that the world steel consumption growth is likely to slow down significantly to 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 Tata Steel share has lost over 10 per cent since the announcement of the Tata's winning the Corus battle as market analysts described the deal as "over-valued".

However, Group Chairman Ratan Tata said the market was taking a short-term view.

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 8 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.

Likewise, 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.

First Published: Feb 02, 2007 02:41 IST