India Will Be A Net Exporter Of Flat Steel In Just A Year.

Despite enduring hiccups on land acquisition and environmental clearances, India is expected to become a net exporter of steel very soon.

Experts say while there is a marginal declining trend in consumption, most of the big steel companies are increasing their flat product capacity which are expected to come on-stream starting this December.

“By the next fiscal, the top three companies — Essar Steel, JSW Steel and Tata Steel — will together enhance their production by up to 10 million tonne per annum,” points out Rahul Singhvi, analyst with brokerage Bric Securities.

Incremental consumption has been declining in India on a month-on-month basis. To be sure, some of this is seasonal and a revival is expected, but incremental capacity that will come will outstrip the growth in consumption, Singhvi said.

“The trade is already skewed towards exports. For April, while the volume of steel imported stood at 0.33 million tonne, exports were a healthy 0.32 million tonne,” he said, quoting government data.

Singhvi said a similar trend was witnessed in March where imports preceded exports by a bare 0.01 million tonne.
In the same period, domestic consumption dropped from 6.16 million tonne in March to 5.03 million tonne in April, or almost 18%.

But compared with April 2010, consumption is up 2% and production 5%.

“We have seen an increasing trend towards exports from companies in the last quarter, especially due to some marginal capacities being added. This trend is likely to continue for a few more quarters resulting in India becoming a net exporter, but for how long this trend will exist is difficult to say,” said a prominent Mumbai-based steel trader and exporter, requesting he be not named.

This will be led by European demand, he said. Nearly 70% of Indian exports last quarter went to the continent.

Mukesh Gupta, a steel industry veteran and chairman of Mumbai-based Lloyds Steel, said going forward consumption of flat products will increase globally, especially in the Middle East and Africa, which is currently serviced by Chinese steel makers.

“Owing to increased capacity, cost competitiveness and efficient transportation, India will be a net exporter of flat products from 2013 and will continue to remain so for a couple of years,” Gupta predicted.

He said the total flat products consumed domestically is about 25-27 million tonne per annum (mtpa). Going by a healthy 10% domestic demand growth, India will require 30 mtpa of flat steel by the next fiscal, while there will be an incremental capacity addition of close to 15 mtpa or a little less in the same period. “Most of this will be allocated for the overseas market,” he said.

Source : dnaindia.com