For steel producers in India, even though there may be temporary relief due to a rise in global prices, the future is fraught with danger. Overcapacity in the world steel industry is likely to persist and may worsen during the coming years, according to a study by a working group on steel of the European Community.
The capacity is increasing rapidly in the US, the Far-East and Latin America in the European Union.
The closure of about 12 million tonnes steel capacity has been compensated by increased efficiency and productivity. The European Union had written off about 30 million tonnes of capacity in the eighties. Despite this, the overcapacity persists.
In 1996, Russia exported over 20 million tonnes of steel but the capacity utilisation was a mere 67 per cent. The current overcapacity in Russia and Ukraine is estimated to be between 20 to 30 million tonnes.
Everywhere in the world, there are cries of cheap imports from CIS countries. Even China is crying over dumping strategies used by Russia.
The European Union has fixed Russia's quota of exports to the EC at 8.41 lakh tonnes in 1997, which includes 4.3 lakh tonnes of coils for re-rolling in East Germany. Tonnage is likely to remain unchanged in 1999. Thereafter, it will increase by 2.5 per cent per year, and will rise to around 9.3 lakh tonnes by 2001. The CIS countries, on the whole, exported about 7.5 million tonnes of steel in 1995 to the EEC.
Dumping duty on Indian steel: The fight against dumping is continuing. The Indonesian anti-dumping authority reportedly wants to levy anti-dumping duty on hot rolled (HR) coil imports into the country from India, Russia, China and Ukraine.
The range of anti-dumping duty will be between 20 to 30 per cent. The duties will be imposed if the parties do not satisfy the authorities about the fairness of the exported price levels. From India, the affected parties could be Essar Steel and Tata Steel.
It is claimed by Indonesia that HRC was available from Russia at $280 to $300 per tonne CIF, while it was $318 to $320 for Indian coil. Local producers are said to be charging $370 per tonne. They feel that the 5 per cent import duty is not adequate, and hence the need for anti-dumping levies.
Egypt has also complained that imports of cheap steel is hurting its domestic producers. Imports of HR coils are traded at $235 per tonne and CR coil at $350 per tonne.
The demand for iron ore in India and abroad is likely to increase in the near future. The rising demand will be mostly from China, South Korea, India and Taiwan to feed their blast furnaces. It will also be from new DR plants that are springing up in many parts of the world and particularly in West Asia, Latin America and Africa.
The result is a large increase in sea-borne trade of iron ore, which from about 412 million tonnes in 1997 may rise to 450 million tonnes in 2000 and touch 500 million tonnes in 2005.
India, which is the third largest supplier of iron ore, after Brazil and Australia, will have to raise ore production considerably.
At present, production in India is around 70 mtpy, of which around 30 mtpy is exported and the rest is used locally. This production will have to increase to about 150 million tonnes to meet the rising demand of the steel industry and for exports.
There are about 10 iron ore projects at the negotiating stage in India. They are expected to produce around 65 million tonnes of ore.
They are in Orissa, Bellary Hospet, Madhya Pradesh, Bihar and Andhra. However, the moot point is whether all the projects will materialise.
The most ambitious of the projects is the CRA/RTZ venture with Orissa Mining Corporation. According to present indications, the project may take at least three years before anything concrete takes place. In Orissa, there are a number of steel projects coming up, like Neelachal Ispat, Tisco's ten million tonne Gopalpur project and L&T's steel unit.
There are other pig iron projects which will also need iron ore.
In Madhya Pradesh, Bhillai Steel will have to begin mining in new areas as its reserves at Dalli Rajahara mines are running low. NMDC, itself, has ambitious expansion plans on hand, and the Mittals of Ispat are planning an iron ore project in Bailadila, the lease of which has run into controversy.
Down south, Jindal Vijaynagar with Mysore Minerals, is going in for an iron-ore mine. Mukand's three mtpy project will also need mining to feed its blast furnaces.
Kudremukh is also expanding in new areas. So is Sesa Goa, which has been acquired by Mitsui of Japan. So the next 10 years in iron-ore mining will be more exciting in terms of capacity expansion in mining than the last 50 years.
