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Crude steel output grew 3.4% in 1999

Jan 24, 2000

According to the International Iron and Steel Institute, domestic crude steel production grew 3.4% to touch 24.26 million tonnes in 1999. The steel sector has posted a mixed performance during 1999. Although output rebounded (see graph) on the back of a global and domestic economic recovery, steel prices continued to be under pressure due to an excess of global supply. The economic revival was aided by a pick up in the East Asian, Japanese and the European economies.

The price scenario in the domestic markets has however not been good in 1999. This was mainly due to two reasons. First, the pick up in the domestic economy was not strong enough to absorb domestic steel output (the other reason may be lower international prices). And second, the surplus global supply found its way into the Indian markets. This created an excess supply in the domestic markets, even as consumption increased, and suppressed prices.

The domestic steel companies sought and were granted protection in terms of floor prices from the government. Coupled with this, these companies began to tap the export markets in view of the better price realisations and sluggish demand in domestic markets.

Currently, the realisations in both the domestic and international markets have firmed up considerably. However, with the European Union and United States imposing import curbs on Indian steel, the prospects have once again blurred. Whether the domestic companies will be able to drive out foreign competition in the domestic markets or establish themselves as leading exporters in the global markets is what will determine the fate of the sector in the coming years. In either case, Indian companies will have to dramatically improve productivity levels in order to become more competitive.

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