Even a year ago, the steel industry across the globe as well as in India was abuzz with a frenzy of big-ticket acquisitions. But, sorry to say, the not-so-long-ago jubilation has completely petered out in recent months. Indeed, equations have entirely changed, and the industry is now going through a rough patch. The skyrocketing demand and unsatiated economic activities, which had earlier propelled the industry, have conspicuously dried down in recent months, courtesy the global economic crisis. The economic predicament, which started in the US housing sector, has gradually spread to other sectors of the economies across the globe. Inadvertently, it has started taking its toll on steel industry across the globe as well as in India. Added to it, the declining economic activities in giant nations like US and China have adversely impacted the demand for steel. Prices of steel have declined by nearly 30% in the past three months as demand has nosedived and the steel majors across the globe have been crippled by overcapacity. The situation has ripple effects across all the steel firms. Steel companies in India are now seriously mulling to cut down prices or curb production and even to postpone their expansion program, as substantial decline in the international prices of steel, fears of cheap imports from China, Thailand and western economies, and increasing material costs are putting enormous pressure on the margins. Imported steel is now available at around $700-800, while Hot Rolled Coil (a hot rolled coil is a base grade which gets converted into higher value steel for consumer goods and cars) is domestically available at around $900-950. The difference is large enough to lure buyers towards imported steel rather than domestic. In these trying times, the domestic steel companies are offering huge discounts on sale of flat steel products and seeking government assistance to mitigate the woes, at least, to some extent. Steel firms such as Jindal, Essar and Ispat have sought government support to persuade steel consuming companies to prefer Indian steel over imported steel. They have also agreed to match the prices offered by foreign competitors. The government rose to the occasion and came out with a slew of measures to give the much-needed boost to the ailing industry.
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