Steel demand in domestic market low, thus, steel sector seeks profit through exports.
Steel sector of India is targeting global customers for profit realizations through exports as domestic demand is quiet low. Steel prices in domestic market have remained flat due to this low demand. Presuming high festive season demand, the steel prices were increased by the manufacturers during August-September which later proved to be false, in effect the prices declined.
Steel behemoths such as SAIL, RINL, JSW Steel and Essar Steel along with other steel companies were also seen exporting their products in last few months, when INR was much above 60 levels against USD.
Steel exports are likely to grow up by 20-25% owing to the fluctuating INR value against USD in FY14, say experts. As per the market sources, the overall exports can reach up to 7 MnT by March, 2014.
It is expected from the steel giants like JSW Steel and Essar Steel might export around 3 MnT and 1.5-2 MnT respectively. Similarly, Tata Steel and SAIL are likely to increase their exports up to 0.2 and 0.7 MnT correspondingly.
Some steel firms have even shown growth in exports during Q2 FY14. JSW Steel’s exports were up by 23% to around 0.84 MnT in Q2 FY14 and they expect to reach around 3 MnT by the end of the current fiscal.
RINL has also set a target of exporting about 1 MnT steel by FY17. “Export during last fiscal was around 8% of the total volume. This fiscal, more volume is going to be exported. From the existing level of INR 5 billion, revenue from exports may go up to INR 10-12 billion,” said, T K Chand, commercial director at RINL.
According to the experts exports will not affect the profit as there’s hardly any difference between margins of domestic sales and exports. While, growth in exports will somehow help recover from the low demand scenario of steel sector in the domestic market.