Sharp Decline In Steel Demand

Production of the country's leading steel producers like Tisco, Rashtriya Ispat Nigam and smaller steel producers like Lloyds Steel have been far lower than projected by them for the June to September period.

The slowdown has resulted in a growing inventory with primary steel producers. Between April and August 1996, the inventory with the primary producers has gone up by 4.18 lakh tonnes from 7.57 lakh tonnes as on April 1, 1996.

Sales of steel by SAIL at 2.2 million tonnes in June - September 96 grew by a mere 1 per cent over the previous year compared with a target of 4 per cent. Production stood at 2.35 million tonnes, which has lead to a slight growth in the inventory levels.

During April-September last year, sales grew by 5 per cent over the previous period

Lloyds Steel, the Bombay-based company, has cut down production by 30,000 tonnes from its earlier target of producing 210,000 tonnes due to slackening of demand and poor price realisation.

Managing director Mukesh Gupta admitted that the problem of low demand had forced it to revise its production target for the first half downward from 210,000 tonnes to 180,000 tonnes of hot rolled coils.

Production at most key steel companies is far short of the first half targets.

According to figures available with the office of the development commissioner for iron and steel, the saleable steel production between April and August for SAIL at 3.6 mt was 6 per cent below target. In the case of IISCO, it was down 12.9 per cent at 0.128 mt. Tisco produced 1.136 mt which was 1.2 per cent below plan level. RINL produced 0.8 million tonnes, 21.1 per cent below the planned level.

The falling demand has led to an inventory pileup. According to DC for I & S figures between April and August 1996, SAIL's inventory rose by 3.07 lakh tonnes, IISCO's by 0.07 lakh tonnes, TISCO inventory went up by 1.06 lakh tonnes.

SAIL chairman MRR Nair said most of the investment plans in major infrastructure and industrial projects have either failed to get started or have been reduced in scale.