By Nageshwar Patnaik in Bhubaneswar, October 13, 2016 : Even as the demand for steel is expected to remain weak globally next year, India and other Asian markets excluding China are expected to provide cushion to the industry, driven by its infra-expansion measures.

“Indian steel demand is expected to report solid growth in 2016-2017 backed by consumption-boosting reforms and infrastructure investment, but its sustainability is under question as key levels of investment are being provided by the government while private investment remains weak,” the World Steel Association (WSA) said in its Short Range Outlook (SRO) report for 2016 and 2017.

India is the third-largest producer of crude steel in the world, besides being the world’s third-largest consumer of finished steel. Domestic steel prices in recent weeks have been increasing and rising exports have also come at a time when overseas realisations have rebounded from their low levels. Exports from India have risen considerably, up by 110.6% in September, government sources said.

However, global steel demand is likely to increase marginally by 0.2 percent this year to 1,501 million tonnes (MT) and rise 0.5 percent 1,510 MT next year after a contraction of 3 percent in 2015, according to WSA report. It attributed uncertainties arising out of persisting geopolitical challenges, aggravated by Britain’s exit from the European Union (EU) as the main reasons for the weak demand for steel globally

The emerging and developing economies, except China, is expected to grow at 4 percent next year and 2 percent this year, the report added.

The industry body represents members who have a combined 85 percent of total steel production worldwide.

“The steel industry environment remains challenging, with escalated uncertainties driven by geopolitical situations in various parts of the world. Recently the UK referendum outcome has further raised uncertainty on the long-awaited recovery of investment in the EU,” T.V. Narendran, chairman of the WSA’s Economics Committee, a press release issued by WSA said.

The WSA said weakness in investment globally continues to hold back a stronger steel demand recovery.

“Investment is subdued in many regions, not only in China, which is undergoing a rebalancing away from investment driven growth. In the developed world, despite persistently low interest rates, private investment remains weak due to a pessimistic outlook on future demand and other continuing uncertainties,” it said by way of explaining its projections.