Steel Imports Down 65% In April Due To Slow Sales And Depreciation.

High interest costs, expectations of lower prices due to slow sales and depreciation of the India . rupee against the dollar have reduced steel imports in the past few months. According to traders and people directly involved in the industry, the fall in steel imports is most visible in the two sectors particularly hit by high interest costs - automobile and real estate and construction.

While the value-added steel segment has been hit, in particular its products such as colour coated sheets that have been majorly impacted. Imports of cold rolled and galvanised sheets have also come down, but the impact is lower when compared to colour-coated sheets, say industry executives.

"High interest costs have led to some decline in steel items like colour coated sheets, used mainly in buildings and sheds," says Neeraj Singhal, managing director of Bhushan Steel that makes most of these value added products. "Also, due to high interest rates, construction activity has slowed down. This has led to a decline in the offtake of steel items for such sector."

According to data collected at various Indian ports, imports of hot rolled coils, sheets and plates have dropped from 509,000 tonnes in April 2010 to 263,000 tonnes in March this year. The imports fell further to 175,000 tonnes in April 2011, a fall of 65%.

Total imports have also come down from 787,000 tonnes in April 2010 to 503,000 tonnes in April this year. In case of heavy plates, the tally has come down to 73,000 tonnes in April 2011, from 103,000 tonnes in April 2010. The other factor that has also brought down imports is higher production in India. According to Ankit Miglani, a director at Uttam Galva, a major importer of hot rolled coils, "The imports have lower due to increased availability of steel locally. Most local producers are increasing their production for the local market, mainly due to the slow sales globally."

According to Singhal, "Automobiles, which use colour coated and CR sheets, have also seen low sales due to high interest costs and the petrol price hike. Some car companies are also resorting to production cuts by allowing employees to go for long holidays. Moreover a lot of car sales have taken place around March towards the end of the financial year. So, there is slowdown in sales in the next two months."

Bhushan Steel supplies auto grade steel to companies such as Maruti and Hyundai .

Lower expectations on prices are also discouraging importers. Most Indian traders are reluctant to sign fresh import bookings of hot rolled coil, on concerns that local steel prices could fall in the monsoon period.

According to internal agency reports, Indian importers are declining offers from premier Chinese mills' HRC priced at $730-740 per tonne, as there is not much difference with Indian prices.

Source : economictimes.indiatimes.com