Public sector Steel Authority of India Ltd., (SAIL) hopes to increase its market share in long products from 7% now to 10% by early next year, riding on the increased demand and its own modernisation and revamp programmes.
The 43.3-million tonne longs market is a products segment that caters mainly to the infrastructure and construction sector. It is dominated by secondary steel producers, but among the main producers, SAIL has the single-largest share.
The new units at the erstwhile Indian Iron and Steel Company (IISCO), now known as SAIL-IISCO Steel Plant, is expected to facilitate SAIL’s efforts to increase its market share. “The plant has the potential to capture newer market segments with its enriched products from the new mills”, SAIL chairman P.K. Singh said on a recent visit to ISP’s unit at Burnpur, West Bengal.
Slump had hit ramp-up
An erstwhile SAIL subsidiary, ISP merged with the parent in 2006. An ₹18,000 crore project was unveiled thereafter to replace the almost 100-year old plant. Capacity was increased from less than a million to 2.5 million tonnes per annum. However, the completion of the project in 2015 also coincided with a slump in demand in the steel sector.
The segments that SAIL-ISP is specifically targeting include construction, bridges, infrastructure and engineering projects.
The 0.5 million tonnes per annum wire rod mill at ISP is capable of producing quality wire rods for industrial uses, critical wire rope applications, medium carbon wires and special quality electrodes. The new universal structural mill at ISP, which enables better surface finish on materials and is used in construction, is also expected to give a fillip to SAIL. “This will strengthen SAIL’s structurals profile and enable the company to roll out economical products which will find wide applications,” a SAIL official said.
The Bhilai Steel Plant and the Durgapur Steel Plant, into which ₹19,500 crore capital has been pumped in for modernisation and in capacity augmentation, also produce long products such as long rails, wire rods, bars and structurals.
SAIL faces competition in long products from Tata Steel, JSW, JSPL and RINL the company said. Secondary steel producers (producers using the Electruc Arc Finance and Directe Reduction of Iron methods) have a 57% share of the longs market.
Demand uptick is seen from the government’s policies such as housing for all, improved road and rail connectivity, airport connectivity in Tier-II cities and infrastructure development projects. These are expected to translate into increased demand for steel.
A recent ICRA report said that domestic steel prices have taken a cue from buoyancy in international steel prices. Demand growth has been a moderate 4.4% between April and July, 2017. However, ICRA also said that the sector was not expected to come out of its stressed condition immediately.
