Mumbai: Steel manufacturers are likely to resort to production cuts to help improve their revenues and margins, till such time the government does something to boost demand for steel in the local market.

Addressing members while speaking at a function organised by the Steel Chambers of India in Mumbai last week, Jindal Iron and Steel joint MD and CEO Raman Madhok made the following three suggestions for improving the lot of the domestic steel industry:

1. Aggressive marketing by the steel industry.
   
2. Bringing out more value-added and innovative products to help improve consumption of steel in the local market - these could be cold-rolled coils, galvanised coils and galvanised plates.
   
3. Imploring the government to make it mandatory for using steel in the construction industry.

Madhok said till such time the government does its bit, the industry should resort to production cuts. He placed the total domestic capacity at 33 million tonnes, out of which 26 million tonnes are under operational capacity. He said imports, mostly of high-quality steel, is of about 2 million tonnes and exports, till recently, are of the order of around 3.5 million tonnes.

Madhok said the current sale price of HR coils at about Rs 11,000 per tonne (the international price is around $170 to $175 per tonne), is way below the breakeven point of most HR coil manufacturers. Prices could go down to as low as Rs 9,000 per tonne, he said.

Madhok also said keeping in mind the current market situation, production cuts in the flat steel segment such as HR coils and CR coils is more necessary than in the long segment such as angles, channels and bars. While flat products find use in automobiles and consumer durable industries, long products are used by the construction industry.