SAIL says steel prices strong

Against the widespread notion that Indian steel prices are finding it hard to stay at current levels and have fallen below international prices, C S Verma, chairman and managing director, Steel Authority of India Ltd (SAIL) tells Promit Mukherjee prices are strong as India remains the demand centre of the world. In an interaction with Promit Mukherjee, Verma said growth in the steel sector is coming back after a very weak fiscal and will reach the traditional levels of 1.2 times the GDP soon. Excerpts:

What is the steel production target for the current year?
Currently, we have just over 12 million tonne (mt) and we will be adding another 1.8 mt by the end of the current year. So SAIL will have 14 mt, which will be taken up to 24 mt by the end of the 12th Five Year Plan in March 2017.

SAIL has been going quite strong with expansion, but does the Indian market have an appetite for consumption?
2012-13 was very tough year for the steel industry and the growth in production and consumption had come down to 4.4% in India. But still India kept on growing as against the western world, which was receding. In the last three months things are changing, and with $1 trillion of investment in infrastructure planned in the current Five Year Plan the growth in steel production and consumption is bound to go back to 1.2 times the GDP.

But have you been able to push the incremental volumes which have hit the market?
In the calendar year 2012, the prices of various grades of steel had fallen 10-12% but in the last three months it increased Rs 500-1,500 per tonne. This has been accepted by the market and the consumption is slowly coming back to normal. India continues to be the demand centre of the world.

Which category of steel is seeing this demand – flat or long? And how are they priced now? What about the difference in Indian and international prices?
Long steel, used for infrastructure applications, is selling at a premium though the price of flat is increasing slowly due to pick up in demand. (It is usually used in automotive and consumer goods.)  But Indian steel is still at a premium against popular belief that international prices are first time stabilising at a premium to Indian prices. There is better demand and growth in India and hence prices are holding strong.