The news is out in the open. Every brokerage has done numbers on how steel companies would benefit and which steel company would benefit the most. But brokerages are not sure how much steel companies can really pass on in terms of a price hike. What is your assessment?
Ravi Uppal: There will be some correction in prices but it is not certain how fast this can be done. It is something which has to be done progressively. We want to make sure that the price increases enough to support the steel industry that have been going through hugestress in the last 18 months. We need to make sure that the Indian steel industry revives because that is in the longterm interest of the Indian economy.
ET Now: Will it be 10 per cent, 15 per cent or a 20 per cent minimum because according to our numbers, the gap now could be as high as about $80 to $90 per tonne? Ravi Uppal: It is very difficult to tell right now. There has to be a price correction. There are no two opinions about it because the industry was forced to sell the products at less than their cost, they were not able to recover their full, variable costs. So, there has to be a correction in a realistic way. We also have to keep the interest of our customers in mind and so it is a balancing act. We have to come into the market and progressively make the necessary corrections.
ET Now: Would you nonetheless say that this is definitely a step in the right direction? Ravi Uppal: There are no two opinions. This step is now overdue. As I said, the prices have been falling for the last 18 months starting from September 2014 and the prices came to a level that the industry was not able to sustain itself. Some of the countries including China and Korea were simply dumping their materials. In China, demand has come down by 150 million tonnes in the last 18 months. They wanted to maintain their production level and so they started dumping steel in all the markets and India was a victim. The imports for India grew by more than 52 per cent in the first six months and if you analyse the rates that we have witnessed in the first six months, India would end up importing something like 15 million tonnes of steel which is more than the production capacity of any of the mega units we have here. Therefore, it had an adverse impact on the Indian market. The Indian market is growing at 45 per cent but any growth but the benefit was not going to Indian manufacturers. It was all taken by imports.
Source: Economic Times