India: ''Demand, raw material price volatility, challenge to steel industry".

India: ''Demand, raw material price volatility, challenge to steel industry".

With increased volatility in demand and raw material prices, the country''s steel industry faces big challenges, says a report by global management consulting firm Boston Consulting Group (BCG).
"Indian steel industry faces two major challenges. The first is increased volatility in both demand and raw material prices," the report said. The report said the expansion programs of the Indian steel industry have been stymied over the last five-years with a growth rate of barely six per cent per annum to become around 70 mt because of issues pertaining to land acquisition, raw material linkages and environmental permissions. It is imperative for upcoming steel capacities in India to be cost competitive on the regional cost curves by leveraging innovation and adapting flexible practises since iron ore, coal and power costs significantly impact the overall position on the cost curve, the report said. For the purpose of backward integration, Indian companies are scouting for metallurgical coal, iron ore, manganese, chromium and other raw materials for steel-making outside India and ensuring a competitive cost structure, it said. "In the mid-to-longer term, it is likely that many steel players who are not cost competitive and do not have raw material access cease to be competitive," Boston Consulting India Partner and Director, Arvind Pandey, said.