Following the long-stretched fall in demand from October to December 2008, Indian steel industry witnessed moderate increase of 2.4% in production during January 2009.
The Secretary of Indian Steel Ministry, Mr. P.K. Rastogi, said that the steel production in January 2009 surged 2.4% over the corresponding month last year, as reported by BusinessLine.
After a decline of 8% in the steel production during October-December 2008 and 13% drop in consumption, 2.4% increase in the production during January 2009 is certainly a positive sign for the steel industry.
The construction sector is chiefly driving the demand for steel products which, in turn, is leading to the increase in steel production. Moreover, the surge in demand was mainly seen in the long steel products, and the demand for flat products has yet to pick up.
Besides, the Indian steel ministry has advocated hike in import duty on steel products to protect the domestic manufacturers from cheaper imports amidst rising steel demand in the country. Union Steel Minister, Ram Vilas Paswan, said, “The sector was suffering due to lower domestic demand while the Indian producers also had problems from cheap imports. The 5% duty imposed in October [2008] is not sufficient so we have recommended a higher duty”, as reported by mydigitalfc on February 18, 2009.
The upward trend in steel production is expected to be continued in February 2009 on account of increased expenditure by the government on infrastructure development and the impact of government’s stimulus packages.
However, the pressure on steel prices in domestic spot market continue to be intense throughout 2009 due to rippling effect of slow growth in key steel consuming industries. Steel prices have already slumped over 35% from the highest level of Rs 50,000 per tonnes in April 2008 to Rs 30,000-Rs 32,000 per tonnes in January 2009.
This is the most appropriate for the Indian steel industry to leverage ongoing financial crisis by spending on the latest technology available at lower cost and by placing long term orders for supply of raw material such as cooking coal and iron ore at cheaper rates.
According to a Research Analyst at RNCOS, “As the steel demand surged in the country, Indian steel makers should utilize this perfect time to resume long halted and ongoing projects as per schedule to offset the loses incurred previously due to financial crisis.”
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Indian Steel Industry Outlook to 2012
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