BOAO Hainan TATA Steel Limited, a subsidiary of TATA Steel Group, will increase investment in China by 5% in 2012 as it seeks to maintain market share according to the company's MD.
Mr Hemant Madhusudan Nerurkar told China Daily that the company will not make any major investments in its rolling mills located in the cities of Wuxi in Jiangsu province and Xiaman in Fujian province this year but next year there will be some changes.
Mr Nerurkar said that the company's problem in China is overcapacity which means production far exceeds real demand.
He added that “Capacity will gradually decline as the government encourages more energy efficiency in the industry. Infrastructure investment in China is still very high and there is still great demand for steel. As Chinese industry becomes more and more self sufficient in raw materials I'm sure it will turn out well."
Mr Nerurkar said rising demand for more value added products such as coated steels, electrical steels, and products for the aviation industry will provide opportunities for the company.
He said the Chinese steel industry has developed very well in the last 10 years at an admirable speed.
He also expects the company's business in China to grow at the same rate as the country's steel consumption growth by 5% to 7% increase year on year.
Mr Nerurkar said TATA Steel will continue to look for coking coal and iron ore assets for acquisition in areas such as Africa, Canada and Brazil to secure raw materials and counter fluctuating prices for coal and iron. The industry is facing severe price fluctuations and 70% of costs come from iron ore purchases, when he spoke at the Boao Forum for Asia in April.
He suggested that iron ore suppliers and steel companies should return to an annual pricing mechanism based on quarterly negotiations between the two sides to avoid frequent price fluctuations for raw materials based on quarterly negotiations between the two sides.
Mr Nerurkar said that in common with the rest of the steel industry, raw material prices will inevitably affect TATA Steel's profitability. (sourced Chinadaily)
Mr Hemant Madhusudan Nerurkar told China Daily that the company will not make any major investments in its rolling mills located in the cities of Wuxi in Jiangsu province and Xiaman in Fujian province this year but next year there will be some changes.
Mr Nerurkar said that the company's problem in China is overcapacity which means production far exceeds real demand.
He added that “Capacity will gradually decline as the government encourages more energy efficiency in the industry. Infrastructure investment in China is still very high and there is still great demand for steel. As Chinese industry becomes more and more self sufficient in raw materials I'm sure it will turn out well."
Mr Nerurkar said rising demand for more value added products such as coated steels, electrical steels, and products for the aviation industry will provide opportunities for the company.
He said the Chinese steel industry has developed very well in the last 10 years at an admirable speed.
He also expects the company's business in China to grow at the same rate as the country's steel consumption growth by 5% to 7% increase year on year.
Mr Nerurkar said TATA Steel will continue to look for coking coal and iron ore assets for acquisition in areas such as Africa, Canada and Brazil to secure raw materials and counter fluctuating prices for coal and iron. The industry is facing severe price fluctuations and 70% of costs come from iron ore purchases, when he spoke at the Boao Forum for Asia in April.
He suggested that iron ore suppliers and steel companies should return to an annual pricing mechanism based on quarterly negotiations between the two sides to avoid frequent price fluctuations for raw materials based on quarterly negotiations between the two sides.
Mr Nerurkar said that in common with the rest of the steel industry, raw material prices will inevitably affect TATA Steel's profitability. (sourced Chinadaily)
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