Steel sales show healthy growth in April

Top private steel makers as well as the government-owned SAIL witnessed robust double digit sales growth in April 2009 compared with same month last year on the back of a healthy demand from construction and automotive sector.

The country's largest steel makers - Tata Steel in the private sector and public sector behemoth Steel Authority of India Ltd - have registered record April sales, raising hopes of a revival in steel demand.

Tata Steel and Essar witnessed up to a 30 per cent jump, while JSW Steel's sales more than doubled during the month. Together, the three firms account for about a fifth of the country s steel production. Earlier this week, SAIL reported 68 per cent increase in sales of long steel products, which are used in construction.

Healthy demand for the metal is a pointer to an upturn in economic activity, which had slowed down considerably in 2008. Tata Steel sold 452000 tonnes of steel last month, a 31 per cent growth over the same period last year. Sales of long products moved up 39 per cent and flat steel sales rose 27% during the month. (See: Tata steel reports 31 per cent increase in April sales)

Flat steel is mainly used by automotive and consumer durable sectors. Demand for steel from the construction and infrastructure sector rose steeply last month, which is visible from high growth in sales of long products.

The automotive sector, which was down for some time, has also started showing signs of revival, said a Tata Steel spokesman. Tata Steel supplies to key automakers such as Maruti-Suzuki, Toyota, Tata Motors and Mahindra & Mahindra.

JSW Steel's sales more than doubled to 400,000 tonnes four lakh tonne in April 2009 compared to April last year, led by demand from the infrastructure sector in semi-urban and urban areas.

''We commissioned a new production line next to our steel plant in Vijayanagar this year, which helped us in meeting the increased demand. This is reflecting in high sales figure for April,'' said JSW Steel's director (finance) Seshagiri Rao.

Some of its key customers include General Motors, Hyundai, Larsen & Toubro, Hindustan Construction Co, LG and Samsung. Half of the steel produced by JSW Steel is sold to construction firms, with the rest distributed between the auto, consumer durables and capital goods sectors. The Mumbai-based company's annual steel production is about 78 lakh tonnes.

Essar Steel, which produces only flat steel products, saw a boost in demand from the auto sector. The company sold 250,000 tonnes of steel last month, 15 per cent more than April 2008. Said Essar Steel executive director Vikram Amin, ''Demand for passengers cars has witnessed growth over the last few months, which has pushed up the sales of flat steel products.''

Domestic crude steel production, which grew 1.2 per cent during January-March 2009 over the same period last year, has bucked the global trend. In the first quarter of 2009 all other top steel producing nations such as China, Japan, the USA, Russia, Germany, Ukraine and South Korea reported a drop in production.