From doom to boom
Rahul Nayar
11 September 2003
An upswing in exports to China and an improvement in domestic demand on account of the government's push to infrastructure have changed the fate of the steel industry
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Mumbai: The domestic steel industry's remedial measures taken to minimise its woes at the beginning of the millennium have not been in vain. The cost rationalisation and the improved price realisations have helped steel manufacturers cope with increased raw-material costs and still post good growth in profits in the last fiscal.
Manufacturers such as Tata Steel have simultaneously managed to boost the quality of steel produced to global standards and brand the value-added products in their portfolio. The strength that the domestic steel industry gained in the last three years was again put to test earlier this fiscal, when steel prices fell, though only to recover later.
Now it is being forecast by analysts that the Indian steel sector will continue to witness growth in at least next few years backed by domestic drivers such as infrastructure and automobile demand along with close co-relation with the rising global trend.
The abysmally-low per capita consumption of steel at 27 kilograms (kg) in India as compared to global majors will primarily drive demand (China has a per capita consumption of 128 kg while the US averages around 472 kg and the European Union 428.6 kg).
Performance during Q1 FY04
The recovery of the steel sector witnessed in 2002-03 was carried forward in Q1 2003-04. Production and apparent consumption were higher by 7.4 per cent and 1.6 per cent, respectively. Production growth was 9.4 per cent in the flats segment as against 5.7 per cent in the non-flat segment. Apparent consumption growth in the flat and non-flat segments was —1.5 per cent and 5.1 per cent, respectively.
