Steel giants ArcelorMittal and Tata Steel are both optimistic about a turnaround of the Indian steel sector in second half of the fiscal even as both the companies reported fall in their net profits for quarter to June 30,this year.
According to assessments made by the Indian Institute of Metals (IMM), the contract prices for coking coal and iron ore are estimated to be revised significantly downward this year and steel prices remain stable for the period. This will enable large steelmakers to earn higher margins from middle of the fiscal.
Tata Steel managing director B Muthuraman and Sanak Misra, chief executive officer, India Green Field Projects, ArcelorMittal, who were present at the 63rd annual general meeting of IIM, were of the view that if steel consumption in India grew by around 6% in 2009-2010, the second half of the fiscal would be comfortable for the Indian steel sector.
The contract prices for coking coal and iron ore have declined by around 60% and 33%, respectively, and are further expected to weaken during the next contracts. Whereas, steel price is expected to remain stable at an average of Rs 30,000-31,000 per tonne across all categories. This will improve margins of the steel players in 2009-2010, JC Marwah, secretary general of IIM, said. But unless the market turns around globally, there were not many opportunities in the sector, he added.
Misra took over as the president of IIM on Friday for 2009-2010. IIM reported that India produced 1, 327 million tonne of crude steel for the calendar year 2008 as against 1,351 mt in 2007.
The country produced 1.35 mt of aluminium in 2008-09 as against 1.24 mt 2007-08. Zinc production was pegged at 582,164 tonne in 2008-09 as against 457,075 tonne in 2007-08. Copper production was at 6,40,665 tonne in 2008-09 as against 7,04,966 tonne in 2007-08 and lead at 60,323 tonne in 2008-09 as against 58,247 tonne in 2007-08.