Calcutta, April 6: The Iraq war is likely to bring a windfall for steel companies as demand outstrips supply in the global market.
Industry watchers believe international demand for steel is bound to grow over the next 18 months, pushing up prices.
While the reconstruction work in Iraq will boost the demand, the temporary withdrawal of the US exporters from the global market will encourage Indian steel companies to fill the vacuum. The combined exports from the US amount to over 8 million tonnes.
Apart from this, the forthcoming China Olympics will also lead to an incremental growth in steel demand.
Fuelled by the Chinese building blitz and the reconstruction work in Iraq, the global demand for steel in the next one year may well overwhelm the supply for the first time in several years. “The current financial year is going to augur well for Indian steel firms. Perhaps for the first time in the country’s history, all of them will make a profit,” sources added.
More importantly, all the leading domestic steel companies have decided to produce at over 100 per cent capacity. Some, like Ispat Industries and Essar Steel, are even planning to go for capacity expansion.
According to Vinod Garg, director, Ispat Industries, the country’s total exports of flat products, like hot-rolled and cold-rolled coils, may go up from 1.8 million tonnes to over 3 million tonnes this year.
The potential for the export of long products, which are used mostly in the construction sector, is even higher.
The total steel production in India is close to 26 million tonnes. Around 12 million tonnes of flat products 14 million tonnes of long products are manufactured. Sources say this figure may go up this year.
“Last year, leading steel companies have made lot of money from exports. On a conservative estimate, there would be at least 15-20 per cent growth in exports this fiscal,”sources said.