Steel demand to get boost with Govt’s attention on infrastructure: Tata Steel

Article from ET Realty

JAMSHEDPUR: The government’s focus on infrastructure and urbanization plan would boost the demand for steel, which is currently low in the country, Tata Steel Managing Director (India and South East Asia) T V Narendran said today.

The demand for steel in the country is poised to grow as the market demand is positive due to government initiatives to invest in infrastructure, airport, road and its urbanisation plans like smart cities, Narendran added.

India has the capability to grow by 7 to 8 per cent, he said and expressed confidence that demand for more investments in infrastructure, airport, road and the government’s urbanization plan would help grow the demand for steel.

However, the steel sector is in doldrums across the globe including China and the situation has come to such an extent that many companies in the sector across the world are unable to pay salaries to their employees, while most others are losing money.

Addressing a gathering on the occasion of New Year, Narendran said the prices of steel have come down to 2003 levels, but claimed that Tata Steel continued to perform well despite the conditions and has remained profitable.

“Prices of steel are not in our hand. It is because of the commitment of our employees, who worked hard to achieve the target, that we have remained profitable but the situation has affected the margins of profit,” he said.

Tata Steel has continued to produce at low cost like the Russian steel sector, which was at an advantage due to appreciation in their currency.

Besides India, the demand of steel is certain to grow in South East Asia, Mexico and Turkey, he said and advocated a level playing field to face the issue of dumping from countries with surplus capacity like China, Korea and Japan and compete with world players in the sector.

The government, Narendran said, had proposed a safeguard duty of 20 per cent to face dumping when prices of steel were USD 380.

However, it was reduced to USD 340 when approved and USD 260 when implemented, thus affecting profit margins.

Referring to the issue of level playing field, he said Tata Steel has invested Rs 40,000 crore, including in Kalinganagar project in Odisha, during the past few years and its management would certainly want support from the government to face challenges from world players.

“We are not scared to compete with the world players,” Narendran said and referred to dumping by China, which, he said, hindered generation of employment opportunities in the country.

Narendran said the challenges in 2014 were due to shortage of raw material supply owing to closure of mines, while in 2015, the problems came from slowdown and dumping by China.

The domestic steel sector has faced dumping problem from Japan, Korea and China, he said and claimed that the last has in fact doubled the figure as the country has turned into a consumption-led economy than investment-led due to prevailing conditions there.

India has a comprehensive agreement with Japan and Korea, he said.

The price of steel between January-December reduced by USD 200 (approximately Rs 14,000), which caused pressure on the profit margin of the company.

“Despite all odds we have been doing well and have been a profitable company,” Narendran said and assured that Tata Steel will fulfill all its commitments, including setting up of Eastern and Western corridor here.