In an exclusive e-mail interview, C.S. Verma, Chairman & MD, SAIL & NMDC reassures growth in steel production & consumption to 1.2 times the GDP growth and how monetary easing and government’s infrastructure investment plans will help achieve that.
Q. What are the challenges or threats the industry is facing at the moment?
Considering the strong investment plans of the government, growth in steel production and consumption is bound to go back to 1.2 times the GDP. Long steel products which are used for infrastructure applications, are witnessing good demand and hence their prices are steadily on the rise. However, prices for flat steel products which are largely used by various manufacturing industries are yet to strengthen due to weak sentiments.
However, a major issue impacting the industry is the future security of raw materials. Issues related to land acquisition and other challenges in mining areas are major points of concern. Insufficient infrastructure, weak logistics management, low R&D spend, manpower productivity and availability of skilled manpower and technology are other challenging factors for the Indian steel industry, despite its competitive advantage in terms of operating cost.
Q. SAIL is bullish on rural markets. Few years down the line, where do you see per capita consumption of steel in India? How has imported coking coal market been? Do you see prices moving up in global markets?
Rural per capita steel consumption in India is around 12-15 kg against the national average of 59 kg; the global average being 215 kg. Low per capita consumption of steel in rural India presents us with an opportunity to promote its use in a still near-virgin-market. The challenge is to take steel virtually to rural buyers’ doorsteps and familiarize them with its many applications. In a proactive move, SAIL has created a dealership chain covering 630-odd districts. SAIL has 562 dealers in rural areas, which is planned to be increased to 1000 shortly. Coking coal price is hovering at around $150 per tonne FOB Australia, which has continued to slide for some time. However, the depreciation of the rupee is likely to offset any gain that the Indian steelmakers might have got from the lower coking coal prices. Prices of seaborne coking coal are highly volatile and it is not possible to predict future prices. However, I expect to see a stable price regime for coal in the near future.