India: Steel demand shows signs of recovery

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27 Feb 2009

The steel industry in the country may be on the road to recovery. NMDC Ltd, that controls 15% of India’s iron ore production and is the country’s largest iron-ore producer says that it has seen a rise in demand off late. NMDC sells most of its ore in long term contracts to local steelmakers like Essar, JSW Steel, Ispat Industries and RINL. NMDC chairman Rana Som says that his buyers were taking more ore from his company than they took in November and December. NMDC produces around 30 million tonnes of iron-ore every year and sells 90% of it in India. Its sales had declined 35% in December after slumping 65% in November. Now, the company has said that its fourth quarter production iron-ore will rise by 25% to 8.5 mn tonnes on improved demand as opposed to about 6.6 mn tonnes for the quarter ending 31 December. The annual production of iron-ore in India is above 160 million tonnes and 60% of the same is exported.
Also, despite the recession, public sector steel units continue to on their expansion plans. Steel minister Ram Vilas Paswan said as much while adding that previous years had given the Indian steel industry a firm foundation that could withstand the current slowdown. “SAIL, NMDC, RINL have reserves and continue on their expansion plans. The schedules have not been much affected by the slowdown,” says Paswan.
With a view to aid consumption, the government announced a reduction 2% excise duty recently with a view to boost demand and consumption. This is expected to bring down prices by Rs800-1,000 per tonne of cold rolled steel, galvanised steel, coated steel products among other steel products. This was above the 4% cut in CENVAT it announced in December 2008.

Source: LiveMint