The world of steel: opportunities in the worst of times

There is a panic around steel and mostly to do with the prevailing pricing conditions. There are worries about the immediate demand situation. There are questions on the long-term growth potential of the industry.

Steel prices will not get back to the levels they reached sometime ago. This, however, does not mean that the industry has no future. Many times in the past, steel has been written off as a sunset industry with no future for it. Each time these pronouncements gained ground, the industry has hit back with strong growth and sublime profits.

The problem with the industry is that while panic grips it very quickly, the optimism and ambitions run faster at the first sign of a recovery. As the industry moves into the higher profitability zone and the coffers of the producers rise to respectable levels, the banks feel more comfortable to lend.

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Steeldons battle gear to fight inflation,cut prices

Steel companies and the government on Thursday worked out a plan that will ensure adequate supply of steel in domestic markets and spare curbs on current export commitments of the companies. The companies in turn agreed to reduce prices of long products, like TMT bars, by Rs 2,000 per tonne and corrugated sheets by Rs 500-1,000 per tonne. These products account for about 25% of the domestic steel demand.

The companies also agreed to use imported hot rolled coils to manufacture high grade steel for exports. The meeting-attended by representatives of Sail, RINL, Tata Steel, JSW, Jindal Steel and Power Ltd, Essar, Ispat, Bhusan Steel & Power and the steel ministry officials-decided to exclude domestically produced HR coils from exports, thereby easing local supply constraints.

Sources said the decision will avert a 10% export tax on steel exports. Another proposal being toyed with is to scrap the 5% import duty on steels.

"Producers of long steel products like TMT bars, prices of which had increased sharply, have agreed that they will roll the prices back.

It is expected that these companies, including Tata and state-run RINL, will provide a relief of Rs 2,000 per tonne to ensure that the common man is not hit," steel secretary R S Pandey said after the meeting.

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