IT’S TIME TO STEER CHANGES

YATINDER-SURI

Q. How do you evaluate the current scenario of stainless steel industry in our country?
A.The demand share for stainless steel rests at approximately 4 per cent of the total steel demand in India. If accelerated substitution strategy continues to replace carbon steel, a surge for the same is definitely expected. Our current over-capacity in long as well as flat products are likely to get used up in the next five years. The future for stainless steel is bright, as the material is quickly gaining popularity in terms of preference over the last few decades. This is on account of properties like corrosion resistance, aesthetics, and health as well as safety aspects for humans and low life cycle cost.

For Outokumpu, the outlook is brighter. With its ever widening product portfolio, we keep offering new innovative products and applications to provide competitive advantages to the customer. We take pride in being the leader in innovations and feel happy to see the competition emulate us in India. The Indian economy is not so robust at the moment, but, there are strong positive indications, thanks to the infrastructure and power projects that are being taken up. However, despite the weak economic scenario, we are looking at incremental growth in 2015. This will be achieved due to our efforts to eliminate corrosion in industrial applications with improved materials. It is an ongoing activity since our inception in India in 2006. From a slow start initially, we now have steady, successful milestone achievements.

Q. What is your mantra to maintain profitability even in a tight situation?
A.Depending on the operational environment, there are over 400 grades of stainless steel which can be used for a diverse range of applications. In India, the dominant demand comes from utensils and kitchenware application segment, which is as high as 65 per cent. This is the low end application being catered to by over three dozen induction melting route manufacturing units as well as four integrated manufacturing plants. Outokumpu does not focus on these low end and low priced segments.

The industrial and infrastructure applications constitute 35 per cent of the overall demand (around 700,000 tons per annum). Since the range of production capability of domestic integrated plants is rather limited at this point of time, imports are vital to meet demands for high end advanced materials for accelerated infrastructural growth. Outokumpu’s presence in India is primarily relevant for high end grades and higher dimensions which are not manufactured in India. Being the oldest and largest stainless steel player in the world, we have positioned ourselves as an organisation with an intent on educating the domestic end users on new grades and applications.

Q. What are the major challenges faced by a stainless steel producer in today’s scenario?
A.There is over-capacity in the domestic sector in the low end and vanilla grades of stainless steel. Since stainless steel is the fastest growing metal in consumption (about 10 per cent annual growth in India), it is hoped that the over-capacity will get filled up in the next four years. The tendency to drop prices to chase a demand that is much smaller than the supply hurts producers in the long run.

The current increase in import duty and rupee devaluation impact is definitely beneficial to domestic players providing them with an opportunity to improve their domestic selling prices and also a greater opportunity in export markets. The domestic players surely need to follow a responsible pricing strategy to improve their bottom lines.

Q. What suggestions in the current policies would you like to bring to the table? Why?
A.Since Indian producers can only cater to the low end applications, the government should not increase the import tariffs which makes the special grades imports very expensive for investments in the critical areas of infrastructure. Our 7000 km coastline makes corrosion a serious issue, so it should be mandatory that all steel related infrastructures being built on coastline must use stainless steel. Almost 4 per cent of our GDP is lost to corrosion, and being a cash-starved nation, we do not have the luxury of allowing infrastructure to corrode and replace or frequent repairs.

In order to make the domestic steel industry grow profitably, stainless steel should be taken away from all FTAs with the developed world. Import of substandard, second choice or materials non-conforming to International standards should be banned. Domestic mills should also not be allowed to sell such defective and non-standard materials in the domestic markets or export them. The import duty structure should not be beyond 10 per cent peak rate of duty, as decided in the WTO Hong Kong agreement and the rate should not be inverted. Raw materials must be at 2.5 per cent, semis at 5 per cent and CR at 7.5 per cent. Inverted rate of duty will only end up killing the downstream industries first and then the steel producers.

There is a glaring lack of R&D capability in the domestic stainless industry. Government should encourage co-operation between the major global players and local mills to upgrade domestic capabilities in the long run. Lastly, India should not seek imports as per BIS standards. Instead, we must follow international standards to ensure that product availability and investments are not hampered.

Q. Even today there are a few clients who opt to import some specific steel sections from abroad. When and how will we be able to witness these import percentages decreasing?
A. The ideal way to reduce and ultimately curb these import percentages would be to encourage co-operation in R&D. The government must also play its part in this regard by encouraging localisation of advanced products through partnerships or collaboration.

Q How does stainless steel provide design flexibility to structural designers?
A Looking at the rapidly changing realm of design and innovation, there has definitely been a shift in options from concrete to other form, and stainless steel is one preferred choice amongst structural designers. All high rise buildings and construction in cities currently utilise carbon steel structural elements. No matter what you do in terms of coating or painting, carbon steel will corrode after a certain period of time. Stainless steel is a cheaper alternative as structural element or as reinforcing element in concrete structures. However, several hurdles arise because building codes do not exist for stainless steel usage, but, we can follow international codes and standards. The new urban cities and rural townships will have to opt for stainless steel to have a long maintenance-free life and lowest life cycle cost. We cannot afford to spend money on maintenance frequently which also leads to inconvenience to the citizens due to disruption during repairs.

Q. How equipped is Outokumpu to cater to the growing demands of infrastructure?
A. India has extremely ambitious growth plans ahead. The long Indian coastline is a highly corrosive environment, and we are committed to make India corrosion-free. Duplex stainless steel is the answer and there are plenty of global success stories where duplex structural elements and reinforcing bars have been used to achieve more than 100 years of maintenance-free life.

Duplex storage tanks have also been made to store oils and corrosive chemicals in tank farms at sea ports. Stainless steel is preferred for desalination of sea water into drinking water, and also for drinking water storage and distribution for humans in safe and hygienic manner. Railway coaches, metro coaches, wagons will become maintenance-free and lighter to save on haulage energy as well as wear-and-tear costs. Railway bridges along coastlines will also become maintenance-free with the use of Duplex stainless steel. As the nation upgrades to Euro VI in auto exhaust emissions, there will be a need for micro alloyed heat resisting grades of stainless steel from Outokumpu.

The per capita use of stainless steel in India is less than 2 kg as opposed to that of 10 kg in China. The “Make In India” campaign will improve our manufacturing base and the need for stainless steel for industrial equipment will increase. Hopefully, in the next decade we can aim to achieve per capita mark of 5 kg.

The Outokumpu vision is to create a world that lasts forever; and we are pursuing this vision aggressively in India as well. With the largest R&D set up, a wide range of high performance grades makes us a standout amongst the competition to cater to all process and environment conditions. Our willingness to share our 100 years of experience with end users is yet another impactful differentiator in the competitive arena.

Q. What new areas of construction would you target to explore in the future?
A. Our outlook for the construction world is extremely positive. We want Outokumpu to be differentiated and known among customers in three ways. First, we are the leading stainless steel company when it comes to sustainability. Second, we take pride in being the best experts to advise our customers on advanced materials; and thirdly, we are the most customer-friendly and customer centric company in the market. These three points are crucial for any new idea to build into a form of a structure – be it a foundation of the structure, bridge, monument etc.

The developed world is exceptionally in sync with the use of materials that have a minimum life cycle of at least 1000 years. As the face of a global brand in India, we would like to bring the same perspective for all the new constructions. We have two prestigious projects coming up – Statue of Unity in Gujarat and also Statue of Shivaji in Mumbai. It is important that such tall statues of great leaders should be able to withstand the vagaries of the environment and should stand tall for 1000 years. It is the responsibility of designers and engineers to design such structures for a longer period, so that the future generations are able to relate to the history and culture of the country. Nowadays worldwide, the monuments, iconic structures are being built for a very long life, from a minimum of 300 to a maximum of 1000 years.

Duplex Stainless Steel Rebars (200 tons) used for the foundation of Swaminarayan Temple in Eastern India is a progressive attitude and definitely needs replication in other parts in India as well. The spiritual Guru wanted the temple to have a life of over 1000 years as a source of inspiration for future generations. The Chedi Temple in Thailand, rail and road bridges in Australia, USA, Spain, Sweden and Hong Kong are other shining examples of sustainable building structures. The Chrysler Building in the US was built in 1930 and still looks new and fresh. The infrastructure development government body in Western India have specified duplex stainless rebars up to the splash zone for the new upcoming road over bridge project. This is a good start which needs continuous push, and that’s how we would like to witness this progressive revolution in the construction world.