The global steel industry will see shifts in demand-supply on account of structural changes being seen in China, the world’s largest steel producer of the metal, and may lead to lower prices of raw materials, Tata group’s chairman Cyrus Mistry said in his speech to shareholders on Thursday.
“Growth in China, the largest producer of steel globally, has tempered, as the country shifts gears to pursue a ‘sustainable’ model of economic development,” Mistry said in his speech in the company’s annual report for fiscal 2013-14. “Deviations in the growth trajectory of China will impact global steel demand-supply and pricing dynamics.”
The developments in China would especially impact import susceptible geographies such as Europe and USA and could be a pointer to moderation in prices of raw materials, according to Mistry.
China produces over 700 million tonnes (mt) of steel, or nearly half of the world’s supply, most of which goes into its domestic infrastructure development. A part of it, however, is also exported at competitive prices which puts pressure on steel producers across the world. The country also consumes large amounts of iron ore, thus affecting prices of this raw material.
Mistry said that structural weaknesses in the global steel industry continue to be a major threat in the medium term even though 2013-14 saw mild trends of macroeconomic recovery in several major economies, including the US and Europe.
In Europe, Tata Steel, through its overseas unit Tata Steel Europe, will continue to focus on market differentiation and cost competitiveness after facing volatile raw material prices and challenging market conditions in 2013-14, he said.
At home, the 6 mt Odisha steel plant project in Kalinganagar, will have a stage-wise commissioning expected to start by end of fiscal 2014-15, Mistry added. In Jamshedpur, as part of the 2.9 mt per annum expansion, the company achieved almost a million tonnes of additional production and sales during 2013-14.
Source: livemint
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