Steel imports to remain strong

Aggressive construction activities to fuel consumption

India is likely to continue imports of construction-grade steel for at least two-three years more, according to experts at the Asian Steel Conference held in Mumbai last week.

In a mandate at the conference, R K P Singh of INSDAG, a Kolkata-based steel research organisation, said the steel fabrication demand was growing by leaps and bounds to meet the robust construction demand.

Emphasising the need to improve India's infrastructure to attain world-class status before the Commonwealth Games in 2010, the consumption of stainless steel in stadia, eco-friendly rakes and electric lines is estimated to rise by a large degree.

The domestic production of construction steel is unlikely to feed demand, especially from multinational companies, which are in the process of building infrastructure in the country.

Last year, India imported about 2.9 million tonnes of construction or special steel, recording a growth rate of 20-25 per cent. In turn, the country exported 3.6 million tonnes of special steel to the neighbouring and West Asian countries.

Experts also anticipate that steel producers may raise prices by Rs 200-300 a tonne this week due to the demand. In October, steel producers across the country raised prices by Rs 400-800 a tonne on rising input costs.

"We estimate a price rise as post-monsoon construction activities have already started. But, for the long-term, we are not so sure," said Dr S K Gupta, director, JSW Steel.

India uses about 44 per cent of the total 45 million tonnes of crude steel production for construction purposes while China consumes about 55 per cent of the 400 million tonne output.

The industry is targeting 60 million tonne output by 2010 and 110 million tonnes by 2020 amid capacity additions by major steel mills.

When asked about raw material prospects, Dr Gupta said if raw materials continue their northward journey, steel producers would either raise prices further or cut back on production.

Hot rolled coil (HRC) is presently quoted at Rs 34,500 a tonne at Gobindgarh in Pubjab, the country's hottest market. Hot rolled sheet (HRS), meanwhile, is sold at Rs 37,900 a tonne.