Surplus Output To Hit Stainless Steel Industry.

India’s stainless steel industry may have 1.3 million tonnes of surplus output by the end of next calendar year on the back of massive capacity additions by domestic producers.

According to N C Mathur, president of the apex trade body, Indian Stainless Steel Development Authority (ISSDA), total production is estimated to surpass four million tonnes by the end of 2012 against the anticipated consumption of 2.6-2.7 million tonnes. Consumption, however, is expected to decline further, due to the slowdown in infrastructure development. “The surplus may widen even further in case demand does not recover soon,” he said.

India’s current per capita consumption of stainless steel is 1.2 kg. The industry target is to double consumption levels in the next two-three years.

While Jindal Stainless is currently doubling its capacity at Hisar to 1.5 million tonnes, its 800,000-tonne plant in Orissa is set to commence operation by August. Other major producers including Salem Steel Plant, controlled by Steel Authority of India, Panchmahal Steel, Viraj Steel and Mukand Ltd among others, have envisaged massive expansion to add 0.5 million tonnes of accumulative capacity by the end of 2012.

The development surrounding Chinese imports of kitchenware, though of a small quantity, has the Indian industry worried because the Chinese products are 20-25 per cent cheaper than the same quality domestic product.

The reason, industry experts say, is because China has better access to nickel pig iron. China imports ore from Indonesia and Philippines and converts it to produce around 500,000 tonnes of nickel pig iron in a year, in addition to its in-house production capacity of 300,000 tonnes —sufficient to produce 15 million tonnes of stainless steel of all grades.

India does not have access to the technology developed for producing nickel pig iron — the process that gives China the edge, with 20-25 per cent cheaper products.

Indian kitchenware manufacturers fear more imports from China may affect the growth of the Indian stainless steel industry. The utensils sector uses nearly 65 per cent of stainless steel produced in the country. “The biggest worry for Indian utensil manufacturers is that China has a surplus capacity of 2.5 million tonnes and is bound to dump it in Indian markets,” said Mathur.

Following extensive volatility in nickel prices, India’s 10,000 stainless steel utensil manufacturers are thinking of producing magnetic grade induction cooking medium to avoid dependence on the imported ingredient. The induction cooking medium is magnetic but is nickel free. Hence, utensil manufacturers can price the final product without bothering about the uncertainty in prices. After hitting a high of $54,000 a tonne on the benchmark London Metal Exchange in 2007, nickel prices slumped to $13,000 a tonne early last year, recovering again to trade currently at $23,300 a tonne.

Source : sify.com