The Indian steel industry has got another boost, this time from the Railway Budget as the ministry announced introduction of stainless steel coaches for trains. The announcement would lead to an immediate demand of over 2 lakh tonnes of stainless steel, say industry experts.
The demand is going to increase and the move would help the industry as the move to add stainless steel coaches would take care of the increasing supply of steel, analysts said.
According to rough estimates each railway coach would require about 8-10 tonnes of stainless steel. Currently the stainless steel industry is growing at 12-15 per cent, while the overall industry growth rate is at 20-22 per cent.
Currently domestic Indian steel firms produces close to 1.2 million tonne of stainless steel. Jindal Steel is the largest stainless steel producer with a capacity of over 6 lakh tonnes per annum. Foreign stainless steel firms like Outokumpu has plans set up production facilities in the country.
"The impact would be positive. But we are yet to know about the quantum (of the steel that would go to produce each racks).
The ministry is yet to provide details of how many stainless steel coaches would be produced every year and we need to analyse the sartorial impact. However, We believe it is a positive move," said Rakesh Arora, metal analyst, Maquarie Research.
The move is expected to reduce regular maintenance of coaches and would increase the passenger safety, said YPS Suri, country head, Outokumpu India. FInland-based Outokumpu is one of the world's largest stainless steel producers.
"Stainless steel coaches will help increase the speed of trains due to less weight," Suri said.
The railway budget has taken care of emerging demand of steel for the future 2011-2012 when the steel capacity will go up to 110 million tonne in this country said J Mehra, CEO, Essar Steel Holdings.
Stock markets reacted positively to the news and the BSE metal index was up by 1.64 per cent. Jindal Stainless moved up 7.19 per cent to close at Rs 160.35, Jindal Steel by 4.16 per cent to Rs 2423, SAIL by 2.57 per cent to Rs 245 and Tata Steel by 0.08 per cent to close at Rs 809.25.