The Hindu Business Line : ‘Invest in new steel plants to check prices’

Kolkata, March 10 The rise in steel prices can be checked only if steel plants generate enough surpluses to invest in new steel-making capacities and meet the growing demand for steel in the country, according to Mr P.K. Bishnoi, Chairman & Managing Director of Rashtriya Ispat Nigam Ltd (RINL).

Addressing members of Merchants’ Chamber of Commerce here today, Mr Bishnoi said that, with growth in the economy and the investment being made in infrastructure development, the demand for steel was growing at rate that was faster than the growth of the domestic steel industry.

As such, unless steel production keeps up with the demand, there is every possibility of steel prices ruling firm in the long term. Mr Bishnoi was responding to questions on the recent rise in steel prices.

According to him, unless new steel making capacities were created, the gap between the demand and supply of steel would go up further and so would steel prices. He said that, already, some of RINL’s customers were buying steel from intermediaries at rates that were higher by around Rs 7,000 per tonne compared with prices at which it is sold by the integrated steel plants.

“It is in the best interest of all of us that customers pay a fair price to steel producers so that the latter are able to generate enough surplus to be able to set up new capacities,” he said while justifying the recent hike in steel prices.

Expansion plans

On RINL’s expansion plans, Mr Bishnoi said that, in the first phase, the capacity of the plant would be hiked to 6.3 million tonnes per annum. He said the first phase would be completed as scheduled in 2010. The expanded capacity of RINL would concentrate on the production of special steels only.

“We are moving away from the commodity market to special steels,” he said.

Against ore export

Mr Bishnoi presented a strong case against exports of iron ore. “If there is scope for value-addition of the iron ore and consumption of the resultant product within the country, then I am not in favour of iron ore exports,” he said.

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