India’s stainless steel industry, analysts say, is under severe stress. Caught between high costs of raw materials and low prices for finished products, steelmakers have been forced to cut operating capacity by as much as 20 percentage points so far in 2013, down to about 50 percent from the approximately 60 percent of last year.
Like China, India is perceived as the world’s next stainless steel growth center, with high levels of production and very high surplus capacity. Last year, for example, India’s total production was about 2 million metric tons.
Yet, a section of analysts following this sector here feel the script has started going wrong. A report in the Business Standard said a run of poor local demand, especially from the kitchenware section, had started affecting growth. The industry has really very big players like Salem Steel Plant and Jindal Stainless, with production capacity of about 5 million tons. The question though is – who’s buying?
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For domestic infrastructure as well as the kitchenware segment, said the report, the total output of both the 400 series (for industrial applications) and 200-300 series (utensil-making) was set to be at 2.5 million tons. Which meant about 45 percent of installed capacity was idle. About 70 percent of stainless steel output goes for industrial use, while the remaining 30 percent makes up the kitchenware segment.
Quoting N.C. Mathur, who heads the Indian Stainless Steel Development Association, a trade body, the report said uptake was also affected because of cheap stainless steel products being dumped from China, Taiwan and Korea. It was not so long ago that the association had expressed hope for India’s stainless steel industry, betting on India’s growth plans announced every five years, to see them through.
New airports, railway stations and bus stops mean more need for stainless steel, right? But that story has got derailed, thanks to what is being characterized as policy roadblocks on the part of the Indian government.
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