New Delhi: Steel prices had a record run in early 2008 but hit a hurdle just after the Beijing Olympics when demand started waning, leaving the industry crying for help.
Inventories started rising from September as global demand dropped after the summer games ended in China.
Big Indian steel makers including state-run Steel Authority of India Ltd (SAIL), Essar Steel Holdings Ltd, JSW Steel Ltd and Rashtriya Ispat Nigam Ltd were forced to cut output and prices, which, at one point, had touched a record $1,250 (Rs61,250 today) a tonne. Tata Steel Ltd was an exception as it saw output rise.
The government was busy throughout the year—spending the first half reining in prices and the second half providing various sops to keep the steel industry from collapsing.
Amid all the ups and downs, the industry is hopeful of 2009 infusing a fresh lease of life to business with demand accelerating and profits maximizing.
Steel minister Ram Vilas Paswan is hopeful of things returning to normal in 2009.
“No doubt, the Indian steel sector blossomed till a few months ago, but is now facing the heat of the global economic meltdown, though its impact has not been severe. The bad phase is temporary and the sector should come out of it in 2009,” Paswan has maintained.
Companies, however, say that economy and demand would be the best judge.
“We are not going to be back to the pre-September levels so soon. Though the prevailing negative sentiments in the world will improve, long-term projects would depend on the demand-supply scenario,”said SAIL chairman S.K. Roongta.
Terming 2008 as “unpredictable”, JSW group chief financial officer Seshagiri Rao said: “It gave us a lot of learning. The worse is over, adjustment process has started and things will improve.”
Ispat Industries managing director Vinod Mittal said the steel industry, which had a good time till September and witnessed a “tsunami-like situation” later with all growth projections going haywire, is optimistic of things starting on a positive note in 2009.
However, chief executive officer of Essar Steel, J. Mehra said 2009 would be tougher.
“The year 2009 would be tougher than 2008 unless there are spendings in infrastructure sectors like roads, ports, shipping, and demand from sectors like white goods and auto picks up,” Mehra said.
Earlier this month, the government came out with a multi-billion dollar package to boost demand in the infrastructure sector including steel. It announced a 4% cut in central excise duty on steel products among other sectors that will have a cascading effect on the economy.