The Hindu Business Line : Chinese demand to brighten prospects for Jindal Stainless

CONTINUING demand for stainless steel in overseas markets, particularly China, is expected to help Jindal Stainless Ltd grow in excess of the overall market growth of 8-10 per cent, a senior company official said.

The company, which is expected to end the 2003-04 fiscal with a 14 per cent growth in its topline to Rs 2,300 crore, perceives a growing market for stainless steel at least for the next 2-3 years, said Mr Arvind Parakh, Director (Finance), Jindal Stainless.

Chinese demand for stainless steel, according to him, has been growing at around 25-30 per cent. "Its production is not able to keep pace with demand. For a market that requires 4.2 million tonnes of stainless steel, it imports almost three million tonnes," Mr Parakh said.

Jindal Stainless' Chinese exports account for 90 per cent of the company's total exports in a year. "We cannot be dependent on one country like this. Therefore, we are consciously looking at other markets in the South-East Asian region. For the fiscal that has just ended, our exports to China have come down to 82 per cent from 90 per cent earlier," he said. The company is also looking at Eastern Europe and West Asian countries.However, China will be an important market as new capacities in that country will take at least another 3-5 years.

Jindal Stainless has been focusing on exports. From a level of 10-20 per cent, stainless steel exports for the company have risen to 45-48 per cent for the year ended March 2004. Yet at the same time, domestic demand is also growing.

The proposed Rs 950-crore investment in the greenfield project in Orissa to produce ferro chrome, ferro manganese, silico manganese and coke oven battery would help the company address the growing domestic demand. The inherent advantage in going into this backward integration, according to Mr Parakh, is cost. Ferro chrome has gone up from 28 cents a pound to 55 cents a pound over the last two-year period. "As our total ferro alloy production is around 200,000 tonnes against a total metal production of 500,000 tonnes, we will be able to save substantially," he said.

He believes that raw material tightness would continue for another two-three years.