Despite the current problems confronting the steel industry in general, and Tata Steel in particular, the long-term outlook for the global steel industry continued to be bright as there is still no effective substitute to the ferrous metal for building construction, said Ratan Tata, Chairman of Tata Steel.

Tata was speaking at the company’s 105th annual general body meeting held recently.

However, he was more pessimistic about the short term scenario, particularly the situation in Europe which accounts for almost two thirds of the company’s combined steel making capacity. Describing the economic scenario in Western Europe in particular as “rather downbeat”, he added, “We hope that Asia will regain momentum and China and India will continue to grow and the global economic situation will improve.”

With steel prices falling and raw material prices on the rise, Tata stressed the need for being “cost-effective”. He said that environmental green energy obligations, particularly in Europe promise to increase costs at a difficult time for the industry, while listing the various steps such as expansion in India, identifying and sourcing raw material more effectively, taking hard decisions to restructure processes and manning, especially in Europe, rationalization of the product mix and opening up new markets in Europe that would be the key focus areas in tackling the situation.

In the UK, the company has recently embarked on an 80 million pounds cost saving programme.

In India, the enhancement of steel making capacity at Jamshedpur by 2013-14, and the commissioning of the 6 mtpa greenfield project in Odisha in two phases in 2015 and 2016, would boost the company’s capacity to 33 mtpa and make it one of the top 10 most effective producers of steel globally.