India Steel Market Watch
October 1: Growth in the key core sector remained sluggish in August, pointing to weakness in the industrial sector and reinforcing the need for moderate interest rates and reforms to sustain the growth momentum.
Data released by the commerce and industry ministry showed the eight core sectors - spanning steel, coal, crude oil, natural gas, refinery products, fertilizers, cement and electricity - grew an annual 2.6% in August. That's slower than the 5.9% expansion in the year-ago month but marginally stronger than the previous month's 1.1% growth.
The decline in steel sector output growth dragged down overall expansion while the other segments posted muted growth. The steel sector contracted an annual 5.9% in August compared to a growth of 9.4% in August 2014. This is the second consecutive month of decline in the steel sector. Coal sector output in August remained sluggish, rising an annual 0.4% compared to a 13.2% year-on-year increase in August 2014.
The eight core sectors account for 38% of the index of industrial production (IIP) and provide a direction of the industrial output data, which is due later in the month. The industrial sector has remained under pressure due to a string of factors, including high interest rates, slowing demand and delay in approvals. But the situation is seen to be improving as clearances have accelerated and interest rates are now expected to moderate.