Improving steel production in May and lower prices in China, the world's top producer of the metal, have led to a sell-off in Indian steel stocks.
Stocks of steelmakers declined in the range of 2.5-3.5 percent this week. Total steel production in 64 countries increased 5 percent in May over the previous month, according to data by the World Steel Association.
Production in Asian countries, which contributes 70 percent of the global output, grew 5.3 percent in the month, the data showed. The highest growth in steel production in May was seen in European (12 percent) and African countries (11 percent), it said.
“End of winter curbs in China and an inventory build-up in the run-up to winter is expected to keep production higher for at least the next six months,” Tarang Bhanushali, assistant vice-president of research at IIFL Wealth, said.
Steel production in China, which contributes nearly 52 percent of the global production, rose 5.8 percent in May to 81.13 million tonnes. That's 75 percent of the total production in Asia, according to the data. Output in India, which contributes 6 percent of the world's steel production, increased 2.4 percent to 8.82 million tonnes. The country's share in Asian steel production is 8 percent.
(Corrects the figures for steel production in China and India.)
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