Lot of people were pinning hopes for
the steel sector in 2011 amid buoyant demand from construction, consumer
durables and automobiles. But the steel sector lost all its sheen as the
year progressed, impacted by inflation, high interest rates, raw material
supply crunch & volatility in Forex market.
Growth for steel sector was predicted
to be around 7-9 per cent in 2011, supported by an expected spurt in
consumption by automobiles, white goods and construction sector & the
government's continuous thrust on infrastructure spending.
However, even before the end of
March quarter, an element of uncertainty started creeping in & Steel makers
as well as the policymakers were virtually clueless on the likely demand and
movement in the price of coking coal, an important raw material for making of
steel.
Already hardening, coking coal
prices shot up to a record high of USD 330 per tonne during April-June, from
USD 200 a year ago due to paucity of supply in the global markets on account of
a major flood in Australia's Queensland province, a major international
supplier.
India's steel sector was then set
to take a major hit as the slowing global economy began taking its toll on
demand in Europe and the US. The Greek debt crisis and its spill over to the
euro-zone eroded demand further in the following months.
Expensive raw materials,
shrinking margins, fall in production levels were few terms that became synonymous
to the steel sector. The 'New Year' euphoria faded. All major steel companies
posted dip in their profit margins.
However, hopes were still alive
for a pickup in domestic steel demand after the monsoon & festivities. But
on the contrary, demand remained subdued, coking coal price did not decline,
interest rates continued to move up, the Rupee depreciated and Irregularities
in supply of Iron ore- the key raw material also aggravated owing to stringent steps
taken by state Govts. to check the illegal mining.
Steel makers went from a period of
bad to worse in the current fiscal. So, with just few days away from the New year, hopes are not very high for a strong revival in demand. But
if the pending bills like the land acquisition bill and mining bill are passed,
then the country's steel industry would have a stable year next year as after
that many pending projects of various steel companies will be cleared.
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