Fortunes of steel industry in 2016 would be better this year than in 2015 simply because it can’t get any worse, said T V Narendran, managing director (India and South East Asia), Tata Steel.
“If we look at 2016, I think prices seem to have hit the bottom. For the past 2-3 weeks, we have seen stability of prices in China and in international prices. Hopefully, prices wouldn’t be as bad as in 2016. For steel industry 2015 was a particularly bad year due to slowdown in China resulting in lot of steel coming out from that country into the international market. Steel prices dropped by $200 going back to levels seen in 2003,” Narendran said on the sidelines of inauguration ceremony of a facility of Indian Iron and Steel sector Skill Council at Rajarhat near Kolkata.
While auto sector has started showing signs of recovery, fortunes of the industry would revive fully when investment in infrastructure sector revives construction sector.
“For the last six months, there has been a revival in the auto sector. But the biggest driver is always construction, from which 60% of demand comes. The sector has also been slightly positive. So, 5-6% demand growth is likely for India this year,” he said.
World Steel Association forecast for the next two years is 7-8% for India.
“The government is continuing to focus on infrastructure announcing steps like smart cities. If the government starts investing in infrastructure, that’s good for the demand and also for managing our costs.”
The Tata Steel MD demanded more protection from Chinese imports, arguing that impact of recent safe guard duties hasn’t been much.
“Since steel is a capital intensive, long-term industry we shouldn’t be vulnerable to problems other countries have.”
Narendran’s view contradicts what the government has been telling the industry so long: Become cost competitive and face Chinese cheap imports.
“One can agrue that India need to be more competitive with respect to China, but China is not making money from selling steel at these prices. So, we can’t call them competitive. So, let’s be fair to the industry including Tata Steel which has invested about Rs 40,000 crore in the past five years in the eastern states of Jharkhand and Odisha,” he said.
In Odisha, formal commercial production from its Kalinganagar plant will be from April 1.
“Already trial run has taken place. Once the blast furnace and the steel melting shop starts this quarter, the whole chain of facilities would begin.”