India’s top steelmakers - including state-owned Steel Authority of India (SAIL), Essar and Ispat - recorded up to 30% growth in sales volume and JSW Steel’s sales almost doubled in October, 2009, compared with the same period last year, backed by robust demand from automobile and construction sectors.

Healthy demand for the metal indicates a sharp turnaround in the economic activity which had slowed down considerably in the second half of 2008.

“Demand for steel is coming mainly from auto, rural construction and infrastructure sectors. The demand for construction grade steel, which slumped in August due to the monsoon, picked up again during October in some major steel markets,” said a senior SAIL executive on condition of anonymity. India’s largest steel producer SAIL posted 28% growth in sales to 850.000 tons in October this year.

The second-largest private steel maker JSW sold more than 400.000 tons in October 2009, which is almost two times compared with the year-ago period. JSW’s crude steel production in October at 453.000 tons was, however, lower compared with September due to unprecedented rains followed by floods in southern India in the first week of the month which disrupted operations at its Vijayanagar plant.

“We are not carrying last month’s inventory and sold whatever was produced. But, this year’s October sales are not comparable with sales in October last year as companies were sitting on huge inventories last year,” said JSW Steel joint managing director Seshagiri Rao.

Most steel companies had cut production in October last year due to the global economic crisis and steep fall in demand. This was accompanied by sharp drop in metal prices as imports surged. But the economy started looking up after the government came out with a stimulus package to safeguard the domestic manufacturing industry early this year.

Among others, primary steel maker Ispat Industries also posted double digit sales growth last month. While domestic steel demand continues to remain firm, prices have come under pressure with the fall in prices in the international market.

“There’s no slag on demand. But there is pressure on prices as consumers are postponing purchases expecting further softening of prices. This has also increased the threat of cheap imports,” said an executive at Ispat who did not wish to be named.

Meanwhile, on Wednesday, Tata Steel cut prices of its products by about Rs 1,500 a ton in tune with falling global rates. With the reduction, Tata Steel joins leading steel makers SAIL, JSW Steel, Essar, Ispat Industries, all of them on Tuesday cut prices of flat steel products by up to Rs 1,500.

Source: Economic Times

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