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ShareMumbai: Producers of flat-steel, who are facing a shortage in demand owing to the slump in the automobile and white-goods sectors worldwide, can expect better time ahead.
According to the European Confederation of Iron and Steel Industries (Eurofer), there are signs of revival in demand for flat steel products.
Eurofer's June report on the Economic and Steel Market Outlook 2009-2010 says that the stock cycle will reverse to be slightly positive in 2010, with an expected 14% growth in steel consumption. It further says that, on average, steel consumption will fall by almost 33% in 2009 compared with 2008.
India accounted for 8% of the total exports to the European Union in 2008. It was the third-largest exporter to the EU after China (31%) and Russia (13%). The EU imported close to 20 million tonne of flat steel in 2008 and India's contribution was 1.6 million tonne.
Flat steel (wide strips) contributes over three-fourths of the total steel imports into EU with long products (wires, bars, beam etc) forming the rest.
Pawan Burde, senior research analyst, Angel Broking, said, "India has lot of capacities of value added (flat) steel which doesn't have that much demand in India and is mainly exported. That market has shrunk now and, if EU increases its imports by 2010, the Indian capacities will be back in action."
Rajat Srivastava, western region director, Engineering Export Promotion Council of India (EEPC), said India's exports to the EU are already showing an improvement on a month-on-month basis since April.
"EU is looking for cheap steel imports, and China and India are the two major options for it. We stand to gain as our products are more acceptable in the western world. In our view, the engineering exports will be the first to revive."
Mumbai-based JSW Steel and Uttam Galva, the two biggest exporters of flat steel products in India, are likely to be the biggest beneficiaries of the revival in European demand.
JSW, which exported close to 40% of its total production till last year, has been focusing on rural demand and is selling more long products, which are used in the construction and infrastructure space. Its export dependency dependence is down to just 13% now.
"Indian is still exporting value-added (flat) products, but exports have seen a dip. In India, we have surplus capacity as for galvanizing and colour coating steel. So some products necessarily have to be exported," Seshagiri Rao, joint managing director and group CFO, JSW Steel, had recently told DNA.
Uttam Galva exports cold-rolled flat steel, galvanised and colour coated steel products to nearly 140 countries. It exports more than 70% of its products and in the fiscal ended March 31, 2009, it had net sales of Rs 4,371 crore as against Rs 3,155 for the year ended March 31, 2008.
