Contrary to popular assumptions, the Indian steel industry is very competitive so far as steelmaking is concerned, but the exorbitant logistics costs are proving its undoing, Amitabh Mudgal, President (Marketing and Corporate Affairs), Monnet Ispat and Energy Ltd, told ISMW.
“So far as steel making per se is concerned, we are very competitive as we have cheap labour, abundant sources of raw material and good technologies….What is killing Indian steel is the high logistics costs,” Mudgal said.
Elaborating further, he said, “Movement of four tons of material – three tons of raw materials coming to and one ton of steel going out from the plant – costs you a prohibitive amount of $40-50 per ton, which is way too high in comparison (to other countries like China). In fact, the difference is phenomenal.”
Mudgal’s views were in line with some other top officials in the steel industry. Notably, Ravi Uppal, CEO, JSPL, recently raised the issue of high logistics costs impacting Indian steelmakers.
Mudgal said that the logistics costs could be contained if more pithead plants were set up in steel as well as in other core sectors.
“We as a country tried this concept (pithead plants) but this is not working out for various reasons,” he added.