There is an urgent need to improve and lower costs of logistics for domestic steel producers, the Indian Steel Association (ISA), the apex representative body of the domestic steel industry said on Friday, February 26. “Managing logistics is challenging and costly for domestic steel producers,” Bhaskar Chatterjee, secretary general of the ISA, said.
The ISA official said that steel production and consumption of steel are expected to grow on the back of government initiatives, and hence transportation of raw materials to steel mills and of finished steel to demand centers is an area to be looked at.
Citing examples, Mr. Chatterjee said, “The freight cost from Jamshedpur in the east to Mumbai is the west is as high as $50 per mt compared to the freight cost of $34 per mt in the case of transportation from Rotterdam to Mumbai,”
So even if India doubles its steel production in the next 10 years, logistic requirements of the domestic steel industry will become virtually unmanageable unless steps are taken to improve the physical infrastructure particularly by state transporter Indian Railways, Chatterjee said.
The Indian government has set a target of 300 million mt of steel production by 2030.
Moreover, most Indian steel mills are located inland, unlike in China, Japan or South Korea where they are located close to the sea, he said.
“This system makes logistic requirements more taxing. Though railways are the naturally preferred mode of transportation for steel and meet more than 80 percent of the total logistical requirement, there are a number of constraints in the railway logistic ecosystem adding to the woes of domestic steel producers,” Mr. Chatterjee added.