Speaking at an online seminar organised by the All India Induction Furnaces Association (AIIFA) along with Hyve India, the managing director of Jindal Steel and Power Ltd (JSPL) said the fall in domestic demand for steel is a temporary phenomenon and will pick up once the government agencies start tendering major infrastructure projects.
"Due to the COVID-19 pandemic, China's steel production was affected for nearly four months from December 2019 and, thus, they started importing steel from every possible source from March 2020. So, today, China is a net importer of steel and we have no threat from that country," Sharma said.
He added that at the same time, the demand from southeast Asian countries and Europe is also increasing as their activities are also impacted. "Therefore, Indian players need to gear up to increase production by reducing cost and improving efficiency."
In Europe, the demand is coming from Italy, Spain and Germany because the steel industries there were also severely impacted due to the pandemic.
"Similarly, a good demand is coming from Philippines, Indonesia, Malaysia and also from China and we need to take advantage of this by selling as much as we can," he added.
Also, with a number of infrastructure projects slated to be tendered by various government agencies, this will give the necessary boost to domestic demand for steel.
"Union Minister for Highways Nitin Garkari recently said there are nearly 460 large projects which will come into action by December 2020, which include the ambitious Bharatmala and Sagarmala projects. Along with these, we are expecting projects from the Indian Railways and other state agencies like BHEL, PGCIL and others like the irrigation department.
"Once these projects are declared by the government, we will be in a position to sell more steel. There will be so much demand in India that will become an importer of steel if we don't gear up," Sharma added.
Besides, the iron ore mines are now operational and there is sufficient availability of domestic coal, which can be used for increasing steel production, he added.
"The government and the RBI (Reserve Bank of India) are taking all the necessary steps from their end. We cannot expect the government to do everything. While we should focus on improving productivity, the government can ensure movement of trucks and tendering of projects as fast as possible. Also, the government can support the industry in terms of moratorium and not declaring companies as NPAs (non-performing assets)," Sharma added. PSK HRS