Steel majors mull alliance to beat downturn

Rakesh Sood

New Delhi, Aug 8: Steel majors like Steel Authority of India (SAIL), Jindal Vijaynagar Steel (JVSL), Ispat Industries and Essar Steel are contemplating the formation of a strategic partnership with a view to strengthen their position in the depressed domestic market as also to increase their share in the overseas markets.

This partnership to be called ‘Indian steel alliance’, will help arrest the falling prices and project Indian-made steel as a material of choice for the global customers. Efforts are also on to rope in Tata Steel, which initially refused to be a part of this alliance.

Though the industry has discussed the proposal with the steel ministry recently, the share of participating companies could not be hammered out so far, ministry sources said.

Under the new arrangement, the usual modus operandi would be to divide a particular market into zones to be catered by a particular company. These zones would be formed on the basis of two criteria, geographical location and competitive advantage, the sources added.

It is also learnt that the move has been initiated due to the overcapacity in the domestic steel companies and limited export markets, which resulted in a loss of Rs 4,000 a tonne on HR coils, the prices of which went down to Rs 12,000 from Rs 16,000 a tonne last year.

“Our annual share in the three-million tonne world steel market is a paltry 1 per cent, and the recent American restrictions on our steel exports have further worsened the situation.

The proposed alliance is expected to give a much needed fillip to exports to the South East Asian economies,” minister of state for steel Braja Kishore Tripathy said, adding steps would also be taken to sign bilateral pacts with the countries in this region.