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Steel sector in rebound mode

Riding on a revival in demand from infrastructure industries at the fag end of the fiscal year 2008-09, steel production picked up in March with most steel companies growing in double digits, Sumant Banerji reports.

business Updated: Apr 07, 2009 22:10 IST
Sumant Banerji

Riding on a revival in demand from infrastructure industries at the fag end of the fiscal year 2008-09, steel production picked up in March with most steel companies growing in double digits.

Leading private steel maker Tata Steel's saleable steel production has grown by 28 per cent while sales have risen at a higher clip of 45 per cent during the month. Similarly, Jindal's JSW Steel reported a 28 per cent jump in crude steel production during the month over last year taking its production during the Jan-March quarter at 11 lakh tonnes, its highest ever in a quarter and 11 per cent more than last year.

State-owned Steel Authority of India Ltd's sales also grew, albeit at a relatively subdued 4.4 per cent at 1.5 million tonnes in March. SAIL's last quarter sales grew by 3 per cent over the quarter at 3.55 million tonnes, in line with its target of bettering its Oct-Dec sales. SAIL had produced 3.02 million tonnes of saleable steel in Oct-Dec 2008.

However, is this the beginning of a sustained demand upturn or just a blip in the otherwise gloomy scenario? The industry is cautiously optimistic.

“The revival is in line with our expectations but it is difficult to say how long it will last,” said a senior steel ministry official. “Demand in construction and auto sectors is picking up but it remains fluid and volatile. The consumer durable segment continues to be under pressure.”

The worst, however, is clearly over. Nobody expects a repeat of the October-December quarter when prices crashed by almost 50 per cent and demand slumped.

“The demand kick started in January itself and there was some pent-up demand from last year that helped it,” said Navin Vohra, partner, Ernst & Young.

“Going forward there will be growth but not in the high quantum we had seen last year. Steel prices will also be under some pressure as globally the situation is still grim. We are just better off.”