Steel prices may soften in 2007: SAIL CMD
Steel Authority of India Limited (SAIL) on Sunday warned that prevailing high steel prices may not be sustainable next year and the industry would need to adjust according to market conditions.
By PTI |
NEW DELHI: Steel Authority of India Limited (SAIL) on Sunday warned that prevailing high steel prices may not be sustainable next year and the industry would need to adjust according to market conditions.
The caution by public sector steel behemoth coincides with the rush among the steel producers to expand through either fresh capacity addition or acquisition.
"In 2007 steel prices could be lower to what are today," SAIL Chairman S K Roongta told media in an interview.
Asked whether he was fearing a situation on glut in the domestic market, Roongta said "there may not be a glut but producers need to price the product according to the market. We are on a higher band and a correction cannot be ruled out".
Roongta's fears stem from continuous fall in imports of steel by China. If China turns net exporter and starts exporting to Europe the Chinese export may face anti-dumping measure forcing China to turn towards South East Asia and India particularly.
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This could affect the steel prices downward.There is a over capacity in the global steel industry. However new kind of capacity is coming up, Roongta said adding there is great potential to grow in the domestic market and SAIL would continue to do better in the backdrop of strong clientele. "We are able to maintain our market share despite new producers coming up in nineties and we shall continue to do so," he added. Roongta pointed out that raw material prices have shot through the roof following which equation of input cost has undergone a sea-change. Those having easier access to raw materials enjoy cost advantage.
He said though SAIL was the biggest integrated steel producer in the country, there was no room for complacency for the PSU as the company has set a target of producing 22 million tonnes of hot metal by 2010. "Achieving a 40 million tonne production annually may not be distant dream for us," he said.
In a bid to cater to the emerging markets, the SAIL chief said his company has firmed up plans to expand its supply base for the automobile sector.
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"We are not much in cold-rolled steel. So we have decided to set up a steel plant near our Bokaro plant capable of producing 2.5 million tonnes of cold-rolled steel to cater to the auto sector," Roongta said.He said SAIL needed the right technology to live up to expectations. "Benefit of product quality upgradation should come through and hopefully the upgraded plants should take care of our futuristic requirements."
He said the steel industry in the Asian region is doing reasonably well and the sector looked well-poised in India in view of the projected growth of the infrastructure sector.
Roongta said SAIL needed to raise external commercial borrowings to part finance the PSU's Corporate Plan worth Rs 37,000 crore to be implemented by 2010.
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