Steel firms forecast stable price regime

Cash freeze

New Delhi, April 15: Steel producers are seeing a revival of demand, though this is not significant enough to influence prices for now.

“Prices should remain stable at least over the next quarter despite signs of an early revival in demand,” said S.K. Roongta, chairman of the Steel Authority of India Ltd (SAIL), on the sidelines of a steel conference organised by the Federation of Indian Chambers of Commerce and Industry.

SAIL has finalised its target to produce around 12 million tonnes of saleable steel during 2009-10.

According to steel secretary P.K. Rastogi, consumption rose 3.8 per cent in the January-March quarter, while production went up 1.2 per cent over the year-ago period.

“The Indian steel industry has weathered the financial storm well. The fourth quarter numbers on production and consumption of steel are a clear indication of the resilience and strength,” he said.

Rastogi was optimistic about the future of the industry. “Greenfield capacity expansions will re-emerge sooner in India compared with other countries due to clear signs of demand prospects.” However, Roongta warned against “euphoric response” to the changed situation.

He suggested collaboration among firms to create more demand for steel, develop industry-specific skills and protect the environment.

A good pick-up in rural demand has helped pull back the industry.

SAIL recorded a rise in volume sales of more than 10 per cent last quarter as demand grew in the rural areas, Roongta said.

The PSU expects to sustain demand by expanding its rural distribution network.

The Centre for Monitoring Indian Economy, too, was optimistic on steel. It said demand had improved and the trend would continue in the current fiscal.

“The ongoing government funded infrastructure projects during the peak construction season, a slight revival in the automobile industry and a sharp 40-45 per cent correction in steel prices from the peak level of July 2008 spurred the demand for the commodity,” the CMIE said in its monthly review of the Indian economy.