Prices have jumped by 15-20 per cent in the international markets. This indicates higher export realisations for the ailing steel industry in general and steel producers in particular. Taking advantage of the rising steel demand from the overseas markets are Essar Steel, Tisco, SAIL, JISCO, Rishtriya Ispat Nigam Ltd and others.

Given this trend, steel exports are sure to jump 30 lakh tonnes by March 2000. During the year to March 1999, total steel exports were placed at 17.2 lakhtonnes -- a jump of over 76 per cent!. This is because, the first two months of any fiscal are usually dry of export orders. As the steel exports have zoomed in these dry months, steel-makers are gearing up for a good export business year ahead.

With overall improved demand, steel prices have jumped $30-$50 per tonne to $230-$250. Considering the other export benefits (duty free imports of raw materials) available to the domestic steel makers, the export realisations mean an extra $10-15 per tonne to the company, in addition to the contracted export price, which itself is tax free. All these would obviously add to the bottomline of the companies bagging the export orders.

There's two reasons for the jump in overall steel demand, first, some of the steel exporters in the south east Asian region have themselves turned importers as their economies are turning around after the severe financial crisis witnessed since late 1997. Throughout the whole of 1998-99, these countries were net exporters of steel togarner maximum foreign exchange.

Continued on Page Second, exporting countries have imposed a 15-per cent tax on exports of steel scarp. Consequently, scrap prices have risen and it has also made the exports of pig-iron/HBI/DRI viable (countries rich in minerals like India, China and Brazil.

The expectation of the industry is that such a measure might radically change the raw material mix for steel production of different countries deficient in such minerals. This is good news for various sponge-iron producers in India (approximately 13) who would now get better price on their exports.

Chief planning manager with the Joint Plant Committee, (a body constituted by Government of India) S Bhattachejee, however, feels the surge in steel demand be viewed with caution. "South East Asia, China, and South Korea have shown signs of improvement, but for other countries, demand may not pick up as per the present expectations."

Notwithstanding this caution, Indian companies have been quick to capatalise on theavailable opportunities.

SAIL, for example, has exported 73,000 tonnes in May this year against a mere 34,300 tonnes last May and in April 1999, it exported 31,000 tonnes as against 11,000 tonned in the previous year's comparative month.

Mukand's managing director Niraj Bajaj, expects company's steel exports to double at Rs 100 crore compared to Rs 50 crore during 1998-99.

Senior marketing executive of Jindal Iron & Steel Co (JISCO) also is optimistic about the rise in steel exports. During two months to May 1999, JISCO exported around 16,000 tonnes of galvanised sheets and plates, slightly lower than 16,569 tonnes in first two months of last year, primarily because of repair works at its Tarapore plant. Had the plant been running to full capacity, the exports would have been 3,000 tonnes higher. JISCO's export order book position is quite impressive, says the company's spokeperson.

Essar Steel's executives too are optimistic about exceeding the level of exports achieved last year and have increasedthe HRC target by seven lakh tonnes from 441,657 tonnes exported last year. Till August the company had export orders for 174,000 tonnes.

The rise in exports for steel companies marks a complete turnaround in export performance of Indian companies from last year. Ironically despite being the largest steel exporter, SAIL exports in 1998-99 were down 50 per cent to a level of 0.5 million tonnes compared with one million tonne in 1996-97.

According to SAIL spokesperson, the essential difference in the present export orders is that bulk of the tonnage is for finished steel In 1997-98 and the earlier years, some of the export orders were of pig-iron resulting in lower realisations to the company. SAIL's got an indirect benefit of rise in demand from south east asia. Its exports are targetted at countries like South America, Europe, Africa and the Gulf region.

Importantly, the way export prices have risen it would make more sense for domestic producers to export rather than sell steel in the stagnantdomestic markets.

For some of the grades, export realisation at $270 per tonne is quite comparable to ex-factory price of most of the steel producers at Rs 12,500 per tonne. The problem for most producers is the port constraints for exports which may act as a bottlekneck for higher exports of steel.

Growth hampered

According to the Economic Research Unit of the Ministry of Steel, out of 250 million tonnes of total cargo handled by all Indian ports, steel gets low priority. In 1997-98, only 6.7 per cent of the goods exported were steel products.

In recent times SAIL had to shift from the developed Vizag port to ill-equipped ports like Kakinanda in Andhra Pradesh. This acts as a severe bottlekneck for higher exports. Apart from the infrastructure bottlenecks, the other problems faced by the industry is that of non-tarriff barriers in the form of quantity restrictions and tarriff barriers such as the protectionist policies employed by countries such as the US. Despite of huge jump in exports,SAIL has still not exported steel plates to the US.