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Fast changing steel market scenario to propel India amaong top players.


Date: 26-02-2019
Subject: Fast changing steel market scenario to propel India amaong top players
For a developing economy the management of Current account deficit is a real challenge. While the import needs for development of infrastructure and to revive and take manufacturing sector to a greater height for supporting job creation and earning opportunities for the youth rendered surplus from the primary sector, continue to remain high, the target of achieving a high export volume becomes imperative.

In the past seven decades of economic development, the country has marked its presence in the global trade, although the journey ahead is long and challenging to reach among the top global players. It is satisfying to note that traditional import export items are gradually becoming the things of the past. Imports are still dominated by oil (24%), gold and jewellery (15%), machinery and equipment (12%), electronic goods (11%), coal and coke (5%) and iron and steel (3.1%).

Exports are undertaken primarily for engineering goods (26%), gems/pearls (14%), petroleum products (12%), textiles, chemicals and drugs (17%). During the April-January 2019 period, India imported 14.5 MT of iron and steel related products under HS Code 72 & 73 categories (including melting scrap, steel based items, ferro alloys, but excluding coking and non-coking coal, iron ore) worth Rs 82,136 crore.

Steel exports are included in export figures of engineering goods. It is reported by JPC that exports of iron and steel related products of 11.5 MT worth Rs 59,475 crore have been undertaken during the period resulting in trade deficit of Rs 22,661 crore. It is clear that all non-essential imports must not burden India with payout of precious foreign exchange and suitable regulatory mechanism is to be put in place to eliminate these imports, including import of defective/second grade steel. The country badly needs an import monitoring cell which would keep a close watch on booking of imports, assist customs authorities with technical inputs on imports aligning with BIS mandatory standards. The current disruptive and highly protective global trade scenario calls for such steps urgently. The spate of free trade in bilateral treaties and elimination of Most Favoured Nation concept eulogised in multilateral trade, have made it conclusive that rendering full support to domestic manufacturing against the trade onslaughts from abroad is one of the most priority tasks of the government.
Indigenous steel capacities are generally created to fulfil the unmet demand from end users. Semi finished steel of 3,24,000 tonne and rerollable scrap of 3,52,000 tonne and Billets of 1,13,000 tonne have got imported. In imports of wire rods of 2,56,000 tonne, the maximum tonnage falls under high carbon/low carbon and cold heading quality. TMT, in which the country has already abundant capacities, in both major and SMEs sectors, has seen imports of 3,79,000 tonne (including 1,94,000 tonne of alloy TMT bars). The cell, mentioned above, must analyse and advise the authorities about the increasing gap between domestic capacity creation and authentic demand by the end users and strategies to fulfil the high imports on account of considerations other than the prices. The same applies for import of 1.1 MT of imports of galvanised and other colour coated products worth Rs 500 crore in which case the major indigenous producer has recently implemented capacity expansion.

A look at the performance of the steel sector during the first 10 months indicates that consumption of 80 MT has grown by a healthy 7.8%. This is the result of crude steel production of 88.2 MT, growing at 3.7%, imports (finished) of 6.5 MT rising at 1.5% and exports (finished) of 5.2 MT declining at 37.3% as compared to the previous year. The consumption growth has been achieved by only 6.3% in non alloy steel and major growth of 22.5% has been achieved by alloy and SS segment.

There is a production growth of more than 1.8 MT in non flat categories of alloy/SS segment during the period, while there is a marginal drop in production of flat alloy/SS products. The production growth in non flat categories by alloy/SS segment has led to its consumption to rise by as high as 43.6% in the period. A part of the answer lies in better prospects in non flat segment as established by more than 7% growth in non alloy long products comprising of TMT/ wire rods, structural and railway products. Another part of the answer for substantial growth in non flat consumption in non alloy/SS segment may be that production data in the current fiscal has been corrected for this segment for true reflection of the market.

The consumption growth in the flat category of non alloy steel is confined to only 5.1% compared to last year. It is interesting to note that non alloy flat production in the current year is lower than last year’s level aggravated by 0.75 MT lower productions of HR Coils products from Tata, and other SMEs (mostly Bhushans) and 0.8 MT lower productions of CRC/Sheets from JSW and other SMEs during the period. The same trend of lower consumption of flat products in Alloy/SS category is evident with a drop of 12.7% during the period.

Source: financialexpress.com

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