Jamshedpur, Jan 3: The problem of India steel industry are plenty. The remedy could be in the joint action by both the government and private sector. Imposing floor price to check dumping in a view to protect the domestic industry is a step in right directon, opines Dr Bal Raj Nijhwan. A pioneer in R&D work on armour plate technology, production technologies of alloy steels from indigenous raw materials including the nickel-free austenitic stainless steels, he is serving as a senior consultant for the last 28 years to the United Nations Industrial Development Organisation (Unido), which is a record by itself.A doctorate in metallurgy from the University of Sheffield in 1941, joined the National Metallurgical Laboratory (NML) at Jamshedpur in its initial years and was its first director for a decade.
Nijhawan has been responsible for setting up 25 internationally-renowned centres of metallurgical engineering and several mineral and metallurgical R&D centres in many developing countries. He was a key figure in the creation of South Korea's steel industry around 1967.
Nijhawan spoke to Arindam Sinha of The Financial Express, when he visited Jamshedpur recently to attend the golden jubilee celebrations of NML.
Will plastic or other things replace steel?
Plastic will not replace steel. Look at the ultra-light steel project, where people like Tata Steel are participating. The demand of steel on the other hand will increase as it directly linked with world population, which is going to touch six billion by 2021.
Would the West be looking towards the East for procurement of steel?
In 1998. US imported 42 million tonnes of steel because the price was low. This was 20 per cent higher, one quarter higher, than the 1997 figure. This was because there was no restriction on imports and US consumers were exercising their choice. The CIS countries were sending steel at the price of pig iron to earn dollars. It was not because the US could not produce the steel. But the price was low and therefore dumping was taking place. But this inflow into US was by choice and not by demand.
So the situation was that CIS countries were selling steel at $100 when the pig iron price was $120 per tonne. At such low landed cost, you can't compete, because that is a price which has nothing to do with production costs, it is to earn dollars. So, imports of steel into any country would purely be dictated by price.
What about anti-dumping laws, don't those impose restrictions?
US has imposed the laws for some countries, but not for the CIS countries, because the President of the US felt that the CIS countries had to be backed up; and if you don't allow them to earn dollars you would have to give them IMF loans or otherwise the system would collapse. And therefore, there must be some source of dollars. If they get the dollars through steel exports to US, they get the dollars to boost the economy. Which is better? It is a political decision.
What happens to the US steel industry?
Their profits, have come down. HR coils, which were fetching around $300-350 a tonne in 1997, were down below $200($195-200) in early 1998, and were at $225 some time back.
Why is the international steel prices going up now?
It is going up now, but it has not gone over the 1997 price mark yet. Prices of hot-rolled, cold-rolled and galvanised coils had dropped, a big drop. Now it is coming up, but they are still nowhere near the 1997 prices. All that is the result of the East Asian financial crisis, with the result that when the demand in Brazil, Indonesia, Thailand dropped, steel produced in South Korea, Thailand, Indonesia, Brazil, Eastern European countries, the CIS countries they started shipping to US until there was a hue and cry. US then started to put duty. But they haven't put duty on the Russians, but that is a political decision.
Hasn't the financial health of the companies been deteriorating as they have been exporting below their cost of production?
But they are public sector plants. They are not in the private sector. They don't care. I don't think they produce a balanced sheet.
Will the cost burden of environment-friendliness still keep the steel plants going?
Yes Because, this is demanded health-wise, environment-wise. They had to introduce measures to be able to reach the legal requirements in foreign countries and possibly also in India. In US and other countries, you cannot put up a plant until the legal requirements are met. That raises the capital cost, Yet, that is inevitable, I mean you cannot kill the population and simultaneously, make steel. Environmentally, the cost increase is a liability which is part of the steel industry. It is not a separate issue, it is part of the industry.
What is the future of integrated steel plants?
They should be able to compete.
What kind of steel do you envision in the 21st century?
Same quality as are being used now. Same properties. There will be no fundamental change.
How is the Indian steel doing?
CIS countries dumping is a global phenomen. Then you had to put floor price to protect the Indian industry. They are steps in the right direction.
How do you place India in the World steel scenario?
It has to grow. It has the potential. The technology is very good, the technology employed by the Tatas is good. Technology-wise the country is okay.
With the size of the Indian population, is reducing manpower in the steel industry the right step?
Steel industry is designed in India & China to promote employment - and you have employed too many people. South Korea for example produces steel at 600 tonnes per man per year. You are producing around 80-120 tonnes per man year.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.