Steel imports dip 29% in H1, yet sector sees net forex outgo

AN ARTICLE PUBLISHED in the Reserve Bank of India’s October bulletin has flagged growing concerns overthe vulnerability of India’s steel industry amid competitive global pricing and rising import pressure.

- SURYA SARATHI RAY

While the call for greater competitiveness in the sector remains timely, recent data show that imports have actually declined in recent months.

Steel imports fell 29% in the first half of the current fiscal year owing to various tariff and non-tariff barriers. Despite this, imported steel remains uncompetitive, with domestic prices trading at a discount of %7,000-8,000 per tonne to imported material.

Local steel prices have slumped toa five-year low, hovering around %47,000-48,000 per tonne for hot-rolled coil, according to market tracker BigMint.

However, with exports being difficult on account of competitive pricing by countries like China in the world markets, especially after the fresh US tariff on steel, India still has remained a net importer of steel for several months now. September was the sixth consecutive month India remained a net steel importer.

The situation has created uneasiness in the steel sector, especially among the primary steel makers. Lower prices of the alloy might bea temporary boon for downstream steel users including automobile and white goods makers and railways. However, the question is whether the current prices are remunerative for the primary steel makers, who have large capacity addition plans.