Barely days after some domestic steel makers announced production cuts to offset shooting costs and rising inventories, the Indian steel industry today sustained a major blow, with the world’s biggest producer of the metal, ArcelorMittal, saying it has postponed its target of commencing production from its two proposed steel plants in the country. The plants are worth Rs 80,000 crore as of now.

Tata Steel too indicated that domestic utilities should be ready to deal with the situation and warned that next year could be worse for them.

“Everybody is grappling with the situation. The downturn appears to be more than a normal one and has assumed epic proportions. We cannot begin production by 2012, as we need to watch the situation keenly. Our projects are directly related to India’s growth. We need to re-align the pace of our projects in tandem with the developing scenario. Economic downturn along with credit squeeze is a serious problem,” ArcelorMittal India chief executive officer Sanjay Bhatnagar told The Indian Express. He pointed out that according to reports some producers had announced cuts in their production to offset shooting costs and rising inventories. “Analysts are even saying that growth could even fall to 6-7 per cent. You should be in a situation where you are able to sell your produce. Actually in liquidity crisis you need cash. So I cannot say when we will commence production unless we get a clear macro economic scenario. Till then we can only guess,” he reasoned. However he reaffirmed his company’s determination to go ahead with Indian projects, but is remained unclear whether steel tycoon Lakshmi Mittal’s company would downsize the project in view of the economic downturn.

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