April 8 (Bloomberg) -- Steel consumption in India, the world’s third-largest user, grew at the slowest rate in four years as a faltering economy and lack of spending on cars and infrastructure projects eroded demand.
Steel use in the year ended March 31 is estimated to have risen 3.3 percent to 73.3 million metric tons from a year earlier, according to initial data on the steel ministry’s joint plant committee website. Production rose 2.5 percent to 77.58 million tons.
Steel demand growth was less than half of the Indian government’s 8 percent estimate as home and car buyers delayed purchases. The economy grew 5 percent in the year ended March 31, the slowest pace since 2003. Car sales fell for the first time in a decade, prompting producers to cut costs.
“This is a negative surprise -- way below what we expected,” said Abhisar Jain, an analyst at Centrum Broking Pvt. in Mumbai, who expected consumption to grow about 5 percent to 5.5 percent. “Subdued car sales, lack of government spending on steel-intensive infrastructure projects could have triggered the worse-than-expected drop in demand.”
Shares of Tata Steel Ltd., India’s biggest producer, fell 1.1 percent to 305.90 rupees at the close in Mumbai, while JSW Steel Ltd., the third-largest producer, declined 0.6 percent to 671.50 rupees. The benchmark S&P BSE Sensex fell 0.1 percent.
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