Institute for Steel Development & Growth (INSDAG) is a non-profit making member based organization established by the central government in line with Steel Construction Institute (SCI), UK. The institute primarily works towards the development of advanced design methodologies and technical marketing by expanding applications of steel in different segments of industry, upgrading skills & know-how, creating awareness amongst potential users and communicating the benefits of steel vis-a-vis other competitive materials etc.
Sushim Banerjee, Director General of INSDAG, in response to queries raised by Raja Iyer, Research Analyst of Asapp Media, informed that the steel sector may grow a minimum of 7-8 percent in 2013-14 assuming growth in fixed capital formation in infrastructure and manufacturing sector growth of 7-8 percent in the minimum with corresponding growth in capital goods sector.
"Indian steel industry is decentralized as small and medium enterprises spread throughout the country continue to meet the local demand for TMT and structurals from the retail and rural sector. There is a case for steel sector consolidation at the public sector level provided there is a political consensus on the consolidation."
While FIMI wants export duty on iron ore to be reduced, Assocham wants Government to retain the high level of export duty so that domestic steel makers can get assured supply. What is your stance on this issue?
From the Indian Steel Industry's point of view, it is essential that natural resources are preserved for use by the domestic sector. Any country including USA and China do it within the norms of WTO Rules and India would be no exception if it preserves iron ore for domestic use and not export the same to feed other country's steel plants.
Besides ban on illegal mining, what other factors, according to you, have led to iron ore shortage in the country? Do you blame the lack of foresight among policy makers for this mess?
Ban on illegal mining has been one of the major factors for iron ore shortage in the country. The Government which has been losing huge revenue has acted to prevent the malaise and Indian steel industry supports the same. However, it is essential that mines which have otherwise been operating fulfilling all legal criteria should be permitted to operate immediately. Banning all the mines in the state despite fulfilling all statutory regulations should be avoided and this strategy may lead to opening of mines to cater to the iron ore requirements in the country and get over the current shortage scenario.
Is it advisable and feasible for Indian steelmakers to set up pelletisation and beneficiation plants in order to process low grade iron ore produced in the country? Can this be a solution to the ore shortage?
Yes, Indian steelmakers need to focus on beneficiation and pelletisation plants to upgrade the use of iron ore in steelmaking furnaces. It is unfortunate that Indian steel producers have long ignored agglomeration and beneficiation technology to derive the maximum benefit out of the existing reserve of iron ore in the country.
Besides raw material shortage, what are the ills plaguing the sector?
Apart from the raw material shortage, major ills plaguing the steel sector are :
a. Lack of investment in infrastructure leading to subdued demand from the construction sector.
b. Lack of growth in manufacturing and processing industry and demand contraction in capital goods sector leading to poor demand from steel intensive sectors.
c. Inordinate project delay particularly in power, road and highways leading to cost and time overrun of the mega projects and delayed procurement of steel as a major raw material.
d. Lack of private corporate investment in a few steel intensive sectors like ports, roads, railways, storage houses, etc.
Steel demand is said to have recovered towards December 2012. Do you expect this recovery to be sustainable? How far would it give pricing power to steel firms?
Steel demand curve in our country has been following a fluctuating trend through out 2012-13. In January 2013 the price increase announced by the steel producers have not been fully absorbed as cheap imports from China and CIS country keep flowing in. The demand growth in the Q-4 of 2012-13 has to be sustained by more Government expenditure in projects which will pull up the poor investment by the private corporate sector. Unless the subdued demand scenario is changed for the better, the steel firms would not be able to enjoy the pricing power.
Some months ago, steel firms were complaining about cheap imports from foreign players. How serious is the threat of "dumping" in the sector?
Cold Rolled Coils and Sheets have been imported in a much higher scale from South Korea and Japan taking advantage of the low custom duty (as per the free trade agreement under CEPA signed between these countries and India, the duties are to progressively reduce from 3.000 - 3.168 percent to 0 percent by 2016-17 in place of 7.5 percent). In the earlier months cheap import of HR Coils arrived from CIS countries and China. There were some talks for imposing safeguard duty (duties temporarily imposed to prevent heavy imports at cheap price) for HR coils arrivals against China. It is necessary to prove that the prices at which the imports are taking place is really causing injury to the domestic producers by setting prices lower than the export price in other countries causing loss of market share, unemployment in the domestic economy in order to prove dumping.
What is your forecast for steel sector growth in 2013-14?
Steel sector for 2013-14 has been projected to go up by minimum 7-8 percent under the assessment that fixed capital formation in infrastructure would be going up and manufacturing sector would experience a growth rate of 7 to 8 percent in the minimum with corresponding growth in capital goods sector.
What is your thought on the structure of the steel industry? Is the steel sector ripe for consolidation?
Indian steel industry is decentralized as small and medium enterprises spread throughout the country continue to meet the local demand for TMT and structurals from the retail and rural sector. There is a case for steel sector consolidation at the public sector level provided there is a political consensus on the consolidation.