Dr JJ Irani Director of TATA Sons during an interview with CNBC TV 18 last week said that there is a need to decouple India from the global steel industry and that there is no threat to the Indian steel industry from China.
Q: Mr LN Mittal did not have very comforting things to say about demand from Europe and the rest of the world. What did you make of that? I mean stock prices have run up but the world's largest player is still saying that 2010 will be a tough year.
A: When we talk about steel, one has to decouple India from the rest of the world. But even in the rest of the world, things are improving - mills were operating at 50% capacity or even less and now in Europe they are gearing up to operate at around 70% to 75%. We are far away from the days of one year back when everyone was operating full out. When we come to India the situation is totally decoupled from what is happening in the rest of the world all Indian mills are operating full out and you can see that the future is quite rosy as far as steel production and market in India is concerned.
Q: ArcelorMittal did go to say that they've seen almost overwhelming demand from China as a market. Do you think prices will continue to move in the order in which China sends out its noises by way of demand or supply?
A: In fact in China the prices have recently come down slightly and the production is also not going up. But what the future will bring we don't really know. But the Chinese don't offer any threat as far as the Indian market is concerned. The import from China is at a minimal level just now.
Q: While your point is taken about India doing much better than the rest of the world, the global picture is perhaps more important because people look at consolidated numbers now for companies like TATA Steel with Corus in and in any case Indian prices track global prices. Do you think 2010 will see a significant recovery then in the global steel situation?
A: I think so and when you said that Indian prices track global prices - it is not really true, at least it hasn't been in the immediate past nor will it be so in the immediate future. Global prices are fluctuating - for hot rolled band they are in the region of USD 550 and for a brief period in August they had gone to over USD 660. So in fact there has been a slight decline in global prices for flat products.
In India the movement is northwards continuously. Every month there is a small increase of 1-2% or 3% as far as flat products are concerned. For long products, monsoon in India has always been a dampener and this is a cyclical variation which we see every year. But the monsoon is now over and the housing business will also, construction will also start will gather steam. So long products also are likely to go up in price as far as the Indian scenario is concerned.
Q: What is your sense of how things will move in Europe from hereon for the next couple of quarters should we expect some kind of flat line growth or do you think things might actually dip a little bit before they recover?
A: No, I think as far as India is concerned it will be a steady increase all along and that increase is being seen in Europe also. Mills which had been shutdown have been restarted in UK and Europe.
Q: How is Corus doing. Last reported numbers from Corus did not look very good? Are things improving there or they will remain difficult for sometime?
A: I am not going to comment on any individual company but I can say that in Corus also you must have seen in the papers that they are restarting some the units which had been mothballed. So obviously the market for them is also improving.
Q: There has been a mild downtick in prices as well. For the rest of this year what kind of price band do you think we could hold for steel?
A: The export prices of hot band will be in the region of USD 600. They are at about USD 550 just now they were just over USD 600 in the beginning of August the prices will go up to about USD 600 as far as the world is concerned. In India, I see no downturn at all for the next two quarters.
