US turmoil may slow down India’s steel production

US turmoil may slow down India’s steel production

New Delhi: Steel industry may face a further slow down and could be forced to bring down prices on account of global turmoil in tandem with dip in domestic demand.

Industry would be forced to cut down production if the prevailing conditions prevail, industry expert said, adding that the growth targets are being revised from double digit to single digit.

“The production growth in the steel sector is likely to decline to 8-9% this year from the expected 12-13% due to global economic slowdown," JSW Group Chief Financial Officer Sheshagiri Rao said.

Indian steel companies would have to cut prices to survive, else market will be flooded with cheaper imports, he said.

Globally, steel prices have softened by about $350 per tonne in the last couple of months, the reason why large-scale consumers are heading for cheaper imports from countries like China and Ukraine.

“The global turmoil has affected demands and put pricing pressure in the US. These would have a ripple effect on Indian market too," an Essar Group spokesperson said.

British steel giant Corus, part of Indian conglomerate Tata group, has already said it is taking steps to optimise production as per the changing demand scenario.

Amidst the changing dynamics in the global markets, the domestic steel firms, however, don’t see any impact on their long-term expansion plans.

“We have secured finances for our projects lined up till 2010. In this scenario, however, raising capital from abroad will not be easy," Rao said.

India’s largest steel producer SAIL too said the crisis would not affect its expansion plans as it has enough financial resources.