CII report forecasts downtrend for steel during April-Sep 2009

The downward trend in the iron and steel industry in Orissa is set to continue in the first half of this fiscal (April-September 2009) with the industry set to witness slump in production, sales, exports and capacity utilisation levels.

On the other hand, other major industries in the state like engineering, cement, chemicals and fertilisers as well as agro-based industries are expected to record growth in production and sales during the period, according to the bi-annual industry monitor for Orissa compiled by the Confederation of Indian Industry (CII).

The first issue of CII’s bi-annual industry monitor for Orissa gives a lowdown on the performance of the major industries of the state during October 2008-March 2009. It also spells the outlook for these industries for the April-September period of this fiscal.

For the iron and steel industry in the state, production levels are poised to decline by 10 per cent while sales would dip by 8-10 per cent during April-September period of this fiscal compared to October 2008- March 2009 period.

Industry leaders expect a slump in capacity utilisation levels by 10-15 per cent, prices to decline by 10 per cent and profit margins for the industry to squeeze by 5-10 per cent during this period.

The iron and steel industry witnessed negative trends in its performance during October 2008 to March 2009 with production and sales dipping by 10 per cent while profit margin eroding by up to 12 per cent, compared to April-September 2008.

One of the major constraints faced by the steel industry is the slackening demand for the final products among the end users and the focus has to be on strengthening transport infrastructure in the state, says the report. In its forecast for the cement industry, the CII report expects both production and sales to grow by 3-5 per cent during the April-September period of this fiscal compared to October 2008- March 2009 period. Cement prices are set to rise by 3-5 per cent and consequently, profit margins are set to improve by 3-5 per cent during the period.

For the cement industry in the state, the trend was positive during October 2008 to March 2009 as production and sales rose by 5-7 per cent during the period as against April-September 2008.

The outlook is also positive for the chemical and fertilisers industries in the state during April-September 2009. While production level in the industry is expected to go up by 4-6 per cent, sales are set to rise by 3-4 per cent and exports by 1-3 per cent, compared to the October 2008- March 2009 period.

With prices of chemicals and fertilisers set to go up by 4 per cent, the profit margins for the industry are expected to improve by 4-6 per cent during April-September 2009.

For the engineering industry, the CII report foresees production growing by 3-4 per cent and sales increasing by 2-4 per cent during the April-September period of this fiscal, compared to the October 2008- March 2009 period. The price level is expected to decline by 5-6 per cent while the inventory levels are set to go up by 2-3 per cent during the first half of this fiscal.