Worst is over for country's steel sector: SAIL chief
Feb 16 2014 , New Delhi
"The worst phase of steel sector is already over. Things are looking up. Demand has gone up. There is liquidation of inventories. Steel prices have also slightly gone up in last 2-3 months. Things are going to be better from here," he said in an interview to PTI.
The domestic steel industry, which has around 96 million tonnes (MT) of manufacturing capacity, has been hurt due to a host of reasons including poor demand and spike in input costs. Margins have consistently contracted since FY'11.
Verma's comments come amid India Ratings and Research, a Fitch Group firm, maintaining negative outlook for the sector due to its weak credit profile for next fiscal.
SAIL put up a good show in the third quarter as the country's largest steel producer clocked seven per cent growth in sales.
"Why steel prices have gone up? It is because demand has gone up and demand has gone up for more consumption has gone up from the end-use sectors. Companies are also spending. This is good time for steel makers. There is good demand for steel and prices have also gone up," Verma said.
A steel ministry body, however, had estimated a mere 0.5 per cent rise in consumption during April-December period.
Domestic producers hiked steel price by up to Rs 2,000 per tonne in the last couple of months cashing in on better demand. Verma sees more of a stable price scenario for the domestic steel sector and does not subscribe to the view that prices would decline from here.
SAIL's average net sales realisation, as a result of better price, marginally rose to Rs 35,336 crore during the third quarter from Rs 35,168 crore a year ago.