IT may not be a breaking news that Arcelor Mittal has spun off its stainless steel business to form a new unit, Aperam, in 2011.

It is a pure business decision as stainless steel market, according to the firm?s announcement, is showing signs of deceleration and pulling down the growth of the combined entity.

There is a veiled recognition that the markets for carbon and stainless steel are not the same and can behave differently in the coming period.

However, World Steel Association talks of steel in totality and their projection for apparent consumption in the global and individual market takes into account market growth for both mild carbon and alloy and stainless steel. Had these two sets of markets been separate and mutually exclusive, this approach is faultless. But in reality they are not and in some sub-segments one is a competitor for the other. For instance, in coaches under rail transportation, stainless steel is intruding fast.

In corrosive resistant areas, stainless steel has been found to be a better option than carbon steel. Are the markets for stainless steel for rail transportation taken out of carbon steel demand for the sector?

In construction market particularly in multi story construction, stainless steel rebar is slowly making its presence felt and could be a potential competitor for high strength Thermo mechanically treated bar (TMT).

Forging sector which has a good potential once mega projects are commenced in a big way, has a demand for EN-8/9 grade and ASTM varieties that can be rolled in a good mild steel plant. Are these demand not added twice (Alloy and mild steel) while talking of total steel demand?

There is nothing wrong with WSA approach of total steel concept if at the end of the exercise, one gets to know separately the share of mild and stainless steel.

This would very much help the prospective investors while setting up facilities for fresh capacity addition. As sourcing of raw materials (Iron Ore and coking coal or natural gas and scrap) is becoming the prime determinants for deciding the location and viability of each project, the bifurcation of demand projection into mild and alloy and stainless would provide an answer. We are also not aware if common facilities (land, water, power and manpower) are being planned by any entity in India to create capacities in both varieties of steel. Stainless offers high margin while mild carbon prefers volume and Indian consumers hardly blend the two.

The author is DG, Institute of Steel Growth and Development. Views are personal