Exports from India increases, Imports decline
Flat Steel (HRC& CRC) used in white goods and consumer durable industry has seen as increase in export quantity from the India in last few months. Whereas, import of Flat steel in the country has witnessed a sharp decline owing to a continuous fall of Indian rupee against Dollar and low demand from Asian countries. Material is being exported to South East Asia, America, Europe & Middle East region. Export to these countries are happening majorly from the western port with a price of material at around USD 538/MT (equivalent to INR 32,800/MT).
Finished Steel consumption, which is considered as one of the key performance indicators of the economy, was at 24 MnT recording a growth of 0.4 per cent in mid of 2013. The probable reason behind the slow growth is poor off-take from infrastructure & automotive industry. The demand for flat steel from automobiles, white goods and capital goods sectors are likely to remain modest in the near future due to continued slow economic growth.
On the other hand, Steel production witnessed an uptick of 5.2 per cent to reach 26.6 MnT during the first four months of the current fiscal from 25.3 MnT in 2012-13.
Speaking more on the scenario of Flat Steel market, a well known importer and stockiest from Mumbai on the condition of anonymity shared the following view.
The margin in the material has remained under pressure due to plants operating at low capacity. Steel producer’s limited ability to pass on the higher cost due to subdued demand from end user industries has also played a vital role to keep the margin under pressure. Margin pressure is higher on the producers who do not have captive raw material linkages.
Demand for Steel in the country is expected to improve in Q4 FY 14, owing to increase in construction activity as projects may expedite completion before closure of the financial year. Also, with Steel prices increasing internationally in wake of an upward movement in Iron ore prices and promising demand, domestic Steel companies are also likely to pass on their increased cost over the last quarter to the end users in a phased manner.