Long steel outdoes flats on core sector boom

Long steel products have shown an upswing, compared with flat steel products. Long steel products like bars, rods and structurals are used in the construction sector, while flat products feed the automobile and consumer products manufacturing industry.

According to the unrevised statistics published in the February issue of Joint Plant Committee (JPC) Bulletin "" JPC is the government arm tracking steel production in the country ""production of long steel products for the period April 2006-January 2007 was 15.9 million tonnes, while the production of flat steel products for the same period stood at 24.18 million tonnes.

However, the JPC felt that there was "under-reporting" of production by induction furnaces producing long steel products, in order to evade excise.

It also felt there was "double counting" of flat steel products as hot-rolled coils were used in the production of downstream products like cold-rolled coils, pipes and galvanised sheets but, for the sake calculations, production was taken as an aggregate.

According to the study-in-progress by the Economic Research Unit (ERU) of the JPC, production of long steels exceeds the production of flat steels.

For example, in 2005-06, the production from induction furnaces amounted to 4.6 million tonnes, which when clubbed together with official figures, takes the actual figure of long steel production to 22.38 million tonnes.

During the same period, flat steel production minus double counting gives an actual figure of 22.56 million tonnes. This makes the ratio around 50:50. This may be the case for 2006-07 as well.

However, the JPC says there could be possibilities of more anomalies and the production of long steels outstripping flat steels by 7-8 per cent cannot be ruled out.

The demand for long steels can be gauged from the fact that the state-run Steel Authority of India Ltd increased prices of long products by Rs 800-1200 per tonne earlier this month. Tata Steel raised prices of Tata Tiscon by Rs 2,000 a tonne for retail.

"The increase in prices doesn't only reflect the rising input costs. It also indicates a rising demand and that the market is ready to absorb price rise," said a steel industry source.

On the other hand, only SAIL increased prices of its flat products by Rs 800 per tonne whereas Jindal Steel and Essar Steel, leading flat products producers, did not increase prices at all.

Industry body Assocham predicts that housing and real estate sector will grow at around 14 per cent annually for the next seven-eight years. This is supposed to give an extra impetus to the consumption of long steel products in India. The railways also expect their steel consumption to pick up with the dedicated freight corridor project in final stages of implementation.