::: I N S D A G ::: Newsletter >> August 2009

The onset of New Year 2012 ushers in major challenges for steel industry. The sovereign debt crisis in Europe is threatening to spread into major Euro zone crisis. Further down grading of the World GDP forecast from 3.6% to 2.5% in the current year, caused primarily by lower GDP forecasts for Europe (-0.3%), Japan (1.9%) and USA (2.2%) have made the fortunes of global steel industry rather uncertain. The growth prospects for the emerging economy led by China have also been lowered. India’s GDP has been predicted to clock a growth of 6.8% in the current fiscal (2011-12) and the same rate for 2012-13. The markets for raw materials particularly coking coal and iron ore are also exhibiting signs of volatility and supply bottle neck. While the down trend in global prices of coking coal by more than 30% (from 335 USD per tonne to 235 USD per tonne) has provided some relief for Indian Steel Industry, the exchange rate devaluation by more than 15% during the last few months has neutralized the gain. In order to restrain Indian export of iron ore, the Govt has raised the export tax from 20% to 30% as well as the railway freight for export consignments. However, the banning of iron ore mining in Karnataka and similar threat in other states like Goa and Odisha may disturb the domestic supply scenario. The global prices of iron ore has fallen from US 185 CFR China to the current 142 CFR China in the past few months. This would have a significant impact on the domestic prices of iron ore in the country. As regards the demand for steel, the infrastructure sector in India is still suffering from poor investment including FDI and there is a demand slackening in the major steel intensive sectors like construction, automobile, heavy machinery equipments, consumer durables, etc. Industrial production index for the first 8 months of the current fiscal year has clocked a growth rate of 3.8% over last year. Steel demand would get a boost by adequate investment flow in infrastructure sector comprising of power, petrochemicals, oil & gas, irrigation, urban infrastructure, etc as well as a higher growth in manufacturing sector comprising of mining, construction, electricity, gas and water supply. However, it must be appreciated that there has to be a suitable environment to facilitate investment into the steel intensive sector. This would require a number of reform measurers which are awating Govt approval. For instance, land acquisition, Mining & Mineral Development and Regulation bills (MM&DR;) are awating their passing by the Parliament which would go a long way in clearing the uncertainties for acquisition / leasing of mines by providing adequate compensation to the displaced persons and acquiring land for new industries. Private investment under Public-Private Partnership mode (PPP) with adequate steps for long term financing would brighten the investment scenario in infrastructure. Thus economic reforms and announcement of policy guidelines have a major role to play in creating an enabling environment for investment to flow in the targeted industrial segments.

INSDAG, in addition to making efforts on promotion of steel consumption by organizing training programmes in the new Code of Limit State Design (IS 800) amongst students of engineering colleges, faculties and professionals as well as organizing award competitions for civil & structural engineering and architectural designs amongst students as well as professionals are also bringing out study reports and publications on advantages of using of composite construction in buildings, ROBs, railway bridges, etc. In order to promote steel fabrication facilities in rural areas, which has been identified as the weakest link in augmenting steel consumption in the rural areas, INSDAG in association with Ministry of Small and Medium Enterprises has evolved a Skill-cum-Entrepreneurship Development Programme for imparting training on steel fabrication to village entrepreneurs..