INDIAN STEEL INDUSTRY CONTINUES TO REEL UNDER PRESSURE.

NEW DELHI, Jan 2 Asia Pulse - India's Steel industry continues to be in the grip of recession in the twilight of Y2K with steel majors registering either losses or decline in profits mainly due to stagnation in demand.

The largest steel manufacturer in the country, Steel Authority of India (SAIL), continued to be in the red despite getting an over Rs 84 billion rehabilitation package (US$1.79 billion) from the Indian government in February 2000.

Most of the private steel producers including Tata Iron and Steel (TISCO), which posted a profit of Rs 2.16 billion in the first half of 2000-01, admitted that they were not getting the right price in the market for their products.

The situation worsened due to new capacities coming into operation without any proportionate increase in the demand for steel in the absence of major infrastructure projects in the power, port or transport sector.

The glut like situation in steel supply was further aggravated by cheap imports of steel industries, seconds and defectives from Confederation of Independent States (CIS), which was instrumental in setting up lower domestic prices.

A sharp rise in prices of vital inputs like coal and power, and rise in transport cost coupled with slowdown in demand and increased availability through cheap imports have severely eroded the profitability of this industry.

Lowering of tariff barriers also exposed the industry to vagaries of international price fluctuations.