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| 'Hard times' ahead for European steel players: Muthuraman |
| Press Trust of India / Jamshedpur Aug 09, 2009, 14:30 IST |
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Tata Steel Managing Director B Muthuraman has said crisis-hit European steel producers’ sales will go down by 75 per cent in the wake of the global economic slowdown, and India and China will be the ones to buck the trend.
"I must tell you one thing that… this year is a difficult year for all European companies including our own part… this is a very very difficult year because when we have demand going down to half and prices going down to half we will see our turnover is one-fourth...," Tata Steel Managing Director B Muthuraman told reporters.
"I would see quarter three onwards the volume would be definitely better in China and India compared to other economies of world...There are deeper crises there," he said.
"…In India the prices have come down to half but then demand has not come down to half. The demand is still the same. So there is volume," he added.
India and China are the only two countries where demand is positive, with China recording a growth of 4 per cent and India doing better at 5.5 per cent in April-June 2009 compared to the corresponding period last fiscal, he said.
Between January and June this year the global demand has dropped by 35 per cent. Of this, the demand in the US is down by 50 to 55 per cent, 40 to 45 per cent in Europe, by about 50 to 55 per cent in Russia and Ukraine, and down by about 20 per cent in Japan and South Korea, he said.
He attributed demand growth in India and China to a number of steps, including stimulus packages, taken by the governments.
"In China...Stimulus package that the government has announced and actually has implemented very well in terms of huge investments in infrastructure.
"The very fact that Indian steel demand is up by about 5.5 to 6 per cent compared to 50 per cent down in rest of the world is...A reflection of the government’s good policies. Number of things have contributed to this...Indians saving rates are high...Indian banking system is very conservative...," Muthuraman said.
While the US will take 18 months to come back to normal, Europe will take longer –- two to three years, he said adding, signs of recovery were visible as far as Indian and Chinese economies were concerned.
"The situation in the world is very complex and all governments are trying to take various steps...I think it will take probably 18 months or so for the US economy to come back to normal. Europe I think will take longer time probably two to three years. And the Indian economy I think will recover much faster just like the Chinese...," Muthuraman stressed.
He said that the Indian economy is largely domestic consumption driven and would not be impacted much even as there is a delay in recovery as far as the global economy is concerned.
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