Indian Steel Unaffected by Global Crisis

By: Anthony_David

The global steel industry is under great pressure because of the euro zone crisis, the debt crisis of the United States and the fluctuating prices in the global market. However, the Indian steel industry is managing to hold its own and has not been significantly affected by the global situation.

Indian steel makers are expected to increase prices in October this year as many new infrastructure and industrial projects are scheduled to take off. According to a report by the Centre for Monitoring Indian Economy (CMIE), finished steel prices in 2012–13 will be about 7% higher than that of 2011–12. Steel prices went up by 15% in the April quarter this year. CMIE has brought down the 2011–12 growth forecast to 9.5% from the earlier announced 12% given the lower than expected production figures of the June quarter.

The global demand for steel is expected to gradually grow over the rest of 2011 although no numbers have been announced. Strong economic growth and urbanization in the BRIC nations are expected to create growing demand for steel in these nations. CEO Larry Reaugh of American Manganese Inc. said, “We expect steel demand to grow worldwide by 8%, most of that growth will come from China.” India’s largest steel maker, Tata Steel, made a similar statement when it stated that steel demand over the year would grow by 9%.

During the first five months of 2011, Japan produced almost 35 million tonnes of steel—a drop of 2% y-o-y. The lower production figures are a result of the catastrophic earthquake that hit Japan in March this year.

The China Iron and Steel Association (CISA) recently reported that China’s daily crude steel production rose for a second ten-day period in the first week of August. The increased production is a result of the expected revival in demand over the autumn months.

On the other hand, the American Iron and Steel Institute (AISI) reported a 1.4% drop in production in the week ended August 27 in comparison to the previous week.

While addressing the 104th AGM recently, Chairman Ratan Tata of the Tata Group said, “While Asia will continue to be the market driver for the steel industry this year, the Europe and the United States steel market will continue to be moderate.” With iron ore and coking coal prices on a rising trend, he expects Tata’s European operations to be smoother only when the company begins receiving raw materials from its reserves in Canada and Mozambique. The prices of both iron ore and coking coal show no sign of declining.

By Anthony David

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