The steel industry is cautiously optimistic about its growth in spite of a sharp rise in business confidence in the fourth quarter of the current fiscal over the corresponding period in 2001-02.

The Business Confidence Index, a study conducted by the Joint Plant Committee affiliated to the ministry of steel, to gauge the mood of steel producers, is up 18.78 per cent in January-March 2003 compared with January-March 2002 and by 3.97 per cent compared with October-December 2002.

The report said while the gross domestic product is expected to grow at about 5.5 per cent, steel demand cannot be expected to grow at a pace higher than that.

It highlighted that the economy on its own strength may not be able to support the surge in the industry at the current pace and therefore exports are crucial.

Underlining the importance of exports, the report said that exports will reduce supply pressure and provide leverage to domestic players to retain pricing power.

Exports have seen a significant increase of 19.2 per cent in the April-November period.

It also said that though the manufacturing sector has been the focus, in real terms it has not shown any major signs of growth.

The report highlighted that the sector has registered a 12.1 per cent increase in imports of finished steel during April-November.

The finished steel production in the country went up by 6.8 per cent and apparent consumption by 5.9 per cent, as per the Joint Parliamentary Committee.