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CHAIRMAN's DESK

" ... The buoyancy of the industry is having a very positive impact on addition of new capacity all over the country. We find that in addition to substantial green field expansions, the existing small players in the steel sector are all planning backward and forward integration so as to fully exploit the market conditions ... " The recent meeting of the Steel Consumers Council in Mumbai and developments thereafter indicate that the high prices of steel are still uppermost on the minds of the consumers. The producers, on the other hand, have pointed out that with Railway freight going up an and natural gas due to come under differential pricing, the prices of inputs continue to rise relentlessly and it is unfair to expect the steel producers to keep prices under check. Some of the producers have already raised prices in response to these measures. They have also pointed out that the end users such as the engineering industry, car industry etc. have no compunctions in raising prices of their goods and, therefore, it appears that the primary steel producers are being squeezed while all other stake holders continue to take advantage of the market. In general, of course, prices have remained stable over the past few months beginning August, 2004 and the Government is keeping a watch on the general trend. In a deregulated environment, there are limits to what the Government can do except for adjusting the excise and customs duties. The buoyancy of the industry is having a very positive impact on addition of new capacity all over the country. We find that in addition to substantial green field expansions, the existing small players in the steel sector are all planning backward and forward integration so as to fully exploit the market conditions. Thus stand-alone rerollers are going in for backward integration to put up induction furnaces and even setting up sponge iron units for supply of metallics. Sponge iron producers in turn are planning forward integration through setting up induction furnaces and rerolling mills. It is also encouraging to note that the planned additions to capacity are taking place all over the country and not restricted to any region. The Eastern sector, in particular Orissa, continues to lead the boom in capacity additions. In the Southern sector, there are reports of about 20 additional units coming up in Kerala thus taking the number to about 50. Tamil Nadu already has about 50 units and Pondicherry and Goa about 20 units each. In the Western sector, Rajasthan and Gujarat are hot sites for development of additional capacity in the secondary steel industry. What is heartening is that steel makers are also trying to make the best of the new Electricity Act provisions whereby inhouse power generation through recycling of sensible heat in sponge iron units can be used to bring down the cost of production and also sold in the open market to add to the bottom line. All these are encouraging developments, which show that the industry is coming of age and is realising that it is important to make the best use of the present buoyant conditions to become competitive both in cost and quality. The UNDP / G EF project on Energy Efficiency Improvement in the Steel Rerolling Mills Sector has finally taken off and we have taken up 10 model units in the first year for providing all possible assistance through the project. We expect that development in these 10 units will have a very positive demonstration effect for all clusters in the country. Unfortunately, we have not been able to obtain some model units in the Eastern region but we hope that in due course, some units will come forward to take part in the second year of the project. In the end, I would like to once again bring to the notice of our readers the fact that the survey of the electric arc furnace / induction furnace and steel rerolling sector is complete. Survey reports are available with the JPC. These are authentic sources of data which should help the industry to update their database and take into account developments all over the country for their future plans. Finally, I take this opportunity to wish all our readers a Very Happy New Year. May 2005 witness even better times for the steel industry. ( J P Singh Joint Secretary, Ministry of Steel & Chairman, JPC) (This is excerpted from JPC Bulletin November' 04)