That was Andrew G Sharkey III, president and chief executive officer of the American Iron and Steel Institute in "US Today."

In Canada, special steel producer Slater Steel Inc, is effecting a 22 per cent reduction in manpower at production units at Hamilton, Ontario and Fort Wayne. In France, the steel industry is increasing output slowly after a 0.2 per cent cutback in production last year.

Leading steel-makers in Japan are tapping lenders for a rainy day. Japanese steel mills are seeking syndicated loan commitments from financial institutions to protect themselves from an unforeseen liquidity crunch. Mitsubishi Heavy Industries alone is considering setting up syndicated loan commitments of upto 100 billion yen($ 848 million) with several Japanese and foreign banks.

Chinese steel makers are grappling with a 39 per cent rise in inventory build-up and plunging prices and in India the steel industry is showing every symptom of recession in the list. Unsold steel stocks are piling and to arrest the build-up steel prices are crashing.

Cost-cutting drives, employment freezes and the legendary voluntary retirement schemes (VRS) are in vogue once again. Old establishments like the Steel Authority of India Limited (SAIL) and the Tata Iron and Steel Company (Tisco) are doing away with old mills and newcomers like Essar Steel, do not have funds to sustain their new facilities.

Essar Steel is seeking a reschedulement of Rs 4300 crore of loans, taken to build their two-million-tonne-capacity hot strip mill. Ispat Industries and Jindal Vijayanagara Steel do not have funds to complete their projects, after a cost overrun.

The industry's problems are being compounded by rock-bottom prices in a market that has practicallyno appetite for steel. Steel sales are being pushed through desperate tactics like discounts and credits.

"When the market price for hot rolled coils is Rs 18,600 a tonne and the stockyard price of a company is Rs 20,400 a tonne, there is a discount involved," say industry analysts.

The discounts, not apparent in the list prices of key market players like SAIL or Tata Steel, may have made the roughly five per cent jump in steel sales possible in the first half of this year. The price slide is showing at "mandi" rates and in the import prices of steel.

The cut-back in customs duties over the last decade compels steel producers at home to take the landed price of steel into cognisance when fixing market rates and worldwide steel prices are falling. The prices of hot rolled coils (which is the most widely traded steel product in the world) have plunged to $187 a tonne in Ukraine, $190 a tonne in Korea, $210 a tonne in Japan and $170 a tonne in Europe, from roughly $300 a tonne a year ago.

Marketwatchers every where are blaming the currency crisis in South East Asia (which was till now, the fastest growing market for steel) on the plight of steel companies worldwide.

To quote Sharkey III of the American Iron and Steel Institute once again, "the collapse of the Asian and Russian economies has plunged 33 per cent of the world's steel capacity into acute distress as their home markets and traditional export markets have virtually disappeared."

"Their solution is to dump their steel wherever they can, at prices far below any market economy producers' ability to sustain itself. Other countries have acted quickly to limit the damage to their industries by closing their markets. The United States must act..." Indian steel producers have taken a leaf out of that book by filing an anti-dumping petition against CIS steel.

Yet, on close inspection, our home grown steel producers have more to worry about than an international surfeit of steel. The glut in the steel market in India became apparent longbefore the South East Asian currency crisis began to rankle with the world economy.

Steel production, which was growing at a modest rate of six per cent after the industry was decontrolled in 1992, showed a phenomenal growth of first 16 per cent in 1994-95 and then 20 per cent in 1995-96. The following year the growth in the output of the silvery alloy slowed down to a modest 6.2 per cent.

Industry pundits and market watchers (like analysts for merchant bankers James Capel) had by then, begun to predict an over-capacity in flat products in the ensuing years. The predictions proved prophecies and last year steel companies had to cut back production by four per cent in deference to a receding demand.

Policy-makers, like Planning Commission advisor BD Jethra, attribute the steel market glut to unplanned development and steel-makers, like Essar Steel advisor JM Bhasin, say policy predictions had gone wrong. "The demand authenticated by the steel ministry for last year was 27 million tonne, but steel saleswere only 24 million tonne," he said.

There are, however, no quarrels over the fact that the glut was in flat products, particularly hot rolled (HR) coils. The anti-dumping petition by steel producers, now pending before the Union commerce ministry, is also against imports of hot rolled coils.

Hot rolled coils imports do constitute roughly a third of the 1.7 million tonne of steel imports every year. All the steel mills awaiting funds from financial institutions for incomplete projects are also going to make hot rolled coils.

The steel ministry package awaiting a nod from North Block, for giving a boost to steel demand will, however, will not benefit producers of hot rolled coils. The package targets the construction grade of steel, popularly known as long products. The finance minister's professed intentions of increasing public spending on infrastructure projects will also benefit long products.

The consumption of flat steel, now in surfeit in the home market, can only take off with a rapid andmassive increase in the production of automobiles, white goods and other consumer durables.

In the developed West, flats dominate the steel market, because infrastructure building (and hence the demand for that grade of steel) is over.

At home, the demand for steel, when it does take off, will come essentially in long products, used to build bridges, buildings and industrial facilities. Some infrastructure projects, like power plants, do need some grades of flats, though.

Most of the new and state-of-the-art steel projects for hot rolled coils and other flats will, consequently, be left in the lurch till the illusory market for automobiles and consumer durables actually picks up, some where in the distant future.