Weak R has kept steel prices firm, asserts Nerurkar

Written by Arindam Sinha | Jamshedpur | Updated: Jan 3 2012, 08:10am hrs
The weakening of the rupee vis--vis the US dollar has helped the countrys steel industry see steel prices remaining firm.

Speaking to FE at a New Years Day ceremony here on Sunday Tata Steel managing director HM Nerurkar when asked where steel prices were headed in the near term said, Right now, thanks to the exchange rate, they are okay, because the R which was R43-44 (to a dollar) has now become R53. so right now the steel prices are quite firm even though we were expecting some downturn but thanks to all this, it has not happened.

Thus whereas in actual terms depreciation of the R vis--vis the greenback has indirectly made commodities, including steel, dearer in terms of the Indian rupee, it has kept steel prices firm.

Hot rolled (HR) coil prices (in $/tonne) have remained stable in the country for the last five-six months between $ 778-780/tonne.

Nerurkar said the companys priorities in 2012 would be to see its investment in its 3 million tonne per annum (mtpa) expansion project here materialise in terms of actual additional production.

Coinciding with the start of the financial year 2012-13 the steel major would be commissioning one by one facilities which would add 3 mtpa output to its current production capacity of around 7 mtpa here, making its rated capacity as 9.7 mtpa.

Asked whether the company would be able to sell the additional output in the domestic market, Nerurkar said going by thumb rule growth of steel consumption in any developing country was generally taken to be 1.2 times its GDP which even if the countrys GDP grew by 7% would mean 8.4%.

Besides, we have a good supply chain system in place as also good relationship with our customers; we dont think selling (the additional output) would be a problem, said the Nerurkar.

Tata Steel is also eager to expedite its 6 mtpa greenfield Kalinganagar project, work on which is already on.

The steel major is also, in partnership with the Jharkhand government, getting ready to invest in a major way in providing flyover infrastructure in this city in order to ease the traffic congestion it is experiencing.

The two together would also be building a domestic airport on the outskirts of the city at an estimated R450 crore which would be capable of accommodating A320 aircraft.

The need for a new airport has arisen as the existing one in the city today and being used by the companys aircraft has been assessed by DGCA to be inadequate for regular commercial flights.

Nerurkar said once the DGCAs clearance was obtained, Tata Steel would commence the process of acquisition of around 500 acres of land needed for the airport project.