The Covid-19 pandemic has forced alloy^[1] and stainless steel players to explore newer ways of increasing their share of value-added and sophisticated products in the short term, and diversifying to mitigate long-term challenges.

The sector was already grappling with a slump in demand from key end-user segments such as auto and construction when the pandemic hit.

In such times, the natural strategic orientation of many companies is typically towards retaining existing customers and seeking segmentation opportunities – a proven way of gaining a focussed competitive advantage and increasing share in the existing market space.

The need of the hour, however, is a blue ocean strategy, which involves venturing into an untapped market space, creating demand, and demonstrating highly profitable growth by creating unprecedented value for customers.

The time is ripe, too, given the policy thrust through the Atmanirbhar Bharat Abhiyan, which encourages players to create new demand markets through value innovation. While the auto sector will remain the key consumer of alloy steel, government support in developing an alloy policy to augment special steel output can open up opportunities for steel players in non-auto sectors such as oil and gas, power, railways and defence as well.

In the milieu, some leading alloy steel manufacturers have already started looking at risk mitigation through diversification into non-auto sectors, and it is imperative that others follow.

^[1] In this article alloy steel refers to special alloy steel (SBQ grade steel); excluding stainless steel