July 10 (Bloomberg) -- Steel consumption in India, the world’s third-largest user of the alloy, increased in the last quarter at the slowest pace in at least five years as demand for automobiles waned amid an economic slowdown.
Demand rose 0.2 percent to 17.8 million metric tons in the three months ended June 30 from a year earlier, according to initial data from the steel ministry. Production climbed 3.9 percent to 19.7 million tons, widening a glut.
India’s economy expanded less than 5 percent for a second straight quarter as investments slowed, according to a May 31 government report. Sales at Maruti Suzuki India Ltd., the nation’s biggest automaker by volume, fell each month this year compared with the same period last year.
Steel demand rose 3.3 percent in the year ended March 31, less than half the government’s 8 percent estimate.
Fitch Ratings’ India unit cut the outlook on local steelmakers to negative from stable for the second half of 2013, according to e-mailed statement today. The downgrade followed muted demand for the alloy and the limited ability of producers to raise prices, it said.
Lower domestic consumption has prompted steelmakers to seek overseas markets, pushing up alloy exports by 13 percent to 1.12 million tons, while imports dropped 34 percent to 1.32 million tons, according to the ministry’s data.
Steelmakers in India are poised to boost exports to a record as a plunge in the rupee increases the value of sales overseas. Exports will climb 30 percent to 6.8 million tons this fiscal year, according to the average estimate of 10 analysts, government officials and company executives in a Bloomberg survey last month.
Shares of Tata Steel Ltd., India’s biggest producer, fell 2.1 percent to 256.20 rupees at the close in Mumbai, while Steel Authority of India Ltd., the second-largest producer, declined 0.5 percent to 47.70 rupees. JSW Steel Ltd., the third-largest producer, lost 2.4 percent to 594.10 rupees. The benchmark S&P BSE Sensex fell 0.8 percent.
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