Despite Low Gains, Steel Sector Seen Benefiting
The steel industry's joint plant committee (JPC) has estimated that notwithstanding depressed profits by steel majors Tata Steel and Steel Authority of India Ltd (SAIL), the first quarter performance will actually benefit the industry in the remaining months of the fiscal following the wiping out of a significant portion of inventories carried over from last year.
Inventories of finished steel among main steel producers was reduced to 17.73 lakh tonne as on June 30,1998, from the level of 18.45 lakh tonne on April 30, 1998. Between April 1 and April 30 stocks had in fact registered an increase of 3.5 per cent from 17.82 lakh tonne to 18.45 lakh tonne. This was reduced by 3.9 per cent to 17.73 lakh tonne during the first quarter.
According to JPC officials, with regard to inventory liquidation, the first quarter performance of main steel producers has actually been better than other years. "Some of the glut in the domestic market will definitely be eased out as a result of the inventory liquidation in the first quarter," officials said.
Apparent consumption of finished steel in the first quarter has also posted a growth of 7.07 per cent to 52.20 lakh tonne as compared to 48.75 lakh tonne in the corresponding period last year, they added.
In July, inventories of saleable steel among main steel producers has been further reduced to 16.59 lakh tonne from the level of 17.81 lakh tonne in the beginning of April.
Public sector steel giant SAIL wiped out inventories of saleable steel by 17.5 per cent to 10.72 lakh tonne from 13 lakh tonne in the beginning of April. SAIL subsidiary Indian Iron and Steel Company Ltd (IISCO) also managed to wipe out saleable steel inventories marginally to 0.41 lakh tonne.
Production of finished steel by main producers, including SAIL, Tata Steel, IISCO and VSP, during the period April to July 1998 has however dropped by 5.9 per cent to 30.43 lakh tonne as compared to 32.34 lakh tonne in the corresponding period last year.
Production of secondary producers during the same period, on the other hand, posted a growth of 5.8 per cent to 40 lakh tonne as compared to 37 lakh tonne in the corresponding period last year. The total production of the industry, with respect to finished steel, has increased by 0.4 per cent.