Morgan Stanley Dean Witter, the US brokerage house, forecasts that $32 billion worth of steel will be sold through Internet portals by 2001 as compared with only $150 million currently. The US-based Anderson Consulting estimates that 40-60 per cent of all metal produced in the world will be sold via the Net.

Indian steel companies are turning net savvy to reap the benefits of e-commerce. Ispat Industries has launched , Jindal Strips Ltd (JSL) will soon launch . SAIL and Tisco have also drawn up strategies to facilitate sales over the Net and are preparing to launch independent steel e-commerce sites.

Both Ispat and JSL project that 20 per cent of their sales would come from business on the Net. JSL predicts that its exports will grow manifold from the current $20 million levels following the launch of the website.

Tisco managing director JJ Irani is reported to have said that e-commerce would change the way Tisco markets steel. "We buy steel in one country and sell it in another country and do a lot of international trade. And from that point of view, e-commerce is going to be very important and we will be implementing it within the next few months".

On the international scene, with the possible exception of proprietary sites run by individual suppliers, and are the only current sites offering the steel industry the opportunity to buy, sell and trade metal with the click of a mouse. Other sites such as , , , , and provide bulletin board listings of available material. Users must contact the seller via e-mail, telephone or fax to complete the deal.

There is a new net venture being floated for the South-Asian region, by Indian entrepreneurs which aims to be a business-to-business (B2B) Internet steel exchange commonly referred to as a vertical portal or vortal. Indian steel industry sources said development and design of this new vortal are on and the site will be launched by mid-April this year.

Planners of this site claim that it will be the first vortal for steel in this part of the world.

Besides finished steel products, it aims to offer raw materials, metallics, consumables and by-products also on the site for e-trade. It will offer online credit and payment facilities, insurance, logistics, survey, transport and other ancillary services that the steel industry requires. It thus aims at becoming a one-stop online shop for the steel community.

Internet can't replace negotiations
It is clear that in the next few years, the e-commerce revolution will dramatically change the way steel products are ordered, purchased, distributed and sold globally. The moot question is: Will the Internet change the nature of global steel trading? Most observers agree that the Net will indeed change the way steel is traded but will not change it totally.

Joint Plant Committee chief economist AS Firoz, says that this is because steel is not one single homogeneous product. "Steel has thousands of products varying in chemistry and size. It is a product where long-term business contracts still hold strong. It is very unlikely that purchase executives of Fiat or General Motors will sit on the Net to strike deals for thousands of tonnes of steel they buy every year, most of which will be of very defined technical specification.

The negotiations are a complex process and the Net cannot replace them". Communications over the Net, Firoz believes, may help the buyers and suppliers in placing orders, keeping track of stocks and regulating logistics. That is when the prices and other conditions are already established through the process of negotiation. Firoz believes that the Internet will be used more for finding potential customers and gathering information on the market. But how much the e-commerce sites help in steel trading is not yet established. We will have to wait and watch.

This view is echoed by others around the world. Marc Stolfi, the creator of MetalShopper.com said, "Ordering metal is not as uniform as ordering a music CD. A piece of metal is not a piece of metal. You still need salesmen, engineers and metallurgists, but the Net does offer a great information-gathering source." Ispat Industries' marketing head Barin Das said, "Most Internet sites create a forum where buyers and sellers meet but real time transactions on the net are not a fully-evolved subject yet." An important point to remember, Das said, is that payment is still done very much through letters of credit. "E-commerce in steel has to be evaluated in the light of the role played by trading houses in the steel business".

Online trading in steel would develop rapidly: Expert
Lou Pahountis, associate partner at Anderson Consulting's (Global Metals Practice), notes that e-commerce in the metals sector is still in its infancy, accounting for less than 3 per cent of business, but is likely to develop rapidly over the next 10 years.

Among consumers, Pahountis said, the biggest influence is being exerted by the global automotive sector. The carmakers' pursuit of a `standardised method of communication' has recently been demonstrated by the big three US automakers' creation of a computer-based automotive network exchange (ANX), and puts pressure on suppliers to head in the same direction.

He outlines four models of e-commerce in steel-the virtual market place, buy direct, spot auction and collaborative direct-and explains that Anderson's research into buyer patterns and into trends within the steel-consuming industries indicates that each of these models is set to grow its market share exponentially.

Virtual Marketplace: This purely customer driven model allows for comparison shopping. Sellers will have ample time to make a decision because the metal will remain in the virtual marketplace until it is sold. The quantity of the purchase will tend to be small.

Buy Direct: This will be the model of choice for those who place and sell orders. Each site will feature a single seller.

Spot Auction: This model will serve as an exchange for commodity product when there is a tight time frame. To a large extent it will be used for excess prime inventories and secondary product. Will draw a share of speculative buying from a large audience.

Collaborative Direct: This arena will be the truly low-cost one over the long run. The benefits of demand-supply coordination will be shared among trading partners. Efficient partners will become preferred suppliers for few strategic buyers-according to mutual need and benefit. In this model, sellers will have an opportunity to build brand loyalty and to distinguish themselves from the competition.