Indian steel exports far outstripped imports in April, says JPC

NEW DELHI (Scrap Monster): The latest trade data published by the Indian Steel Ministry suggests significant surge in steel exports by the country during the month of April this year. On the other hand, steel imports witnessed sharp downfall. For the first time in three years, the country’s steel exports eclipsed imports, Ministry press release stated.

The report published by the Joint Plant Committee (JPC) under the Steel Ministry states that India’s finished steel exports totaled 747,000 tonnes in April this year, surging higher by 142% over the corresponding month a year before. The country’s steel exports had totaled only 308,000 tonnes in April 2016. When matched with the prior month trade data, the April ’17 exports were down sharply by 54%. The imports of finished steel totaled 504,000 tonnes in April this year, down considerably by nearly 23% over the year. The imports declined by 16% over March this year. The country had emerged as net exporter of finished steel during the previous fiscal, after a gap of three years.

The consumption of finished steel totaled 6.015 million tonnes in April this year, marginally higher by 3.4% when matched with the previous year. Over March 2017, the consumption declined sharply by 22% in April ’17. The production for sale of totaled finished steel registered growth of 8.7% over the year to 8.43 million tonnes. Meantime, the production declined by 8.6% over the prior month.

Meanwhile, India Ratings, in its latest report has maintained negative outlook for Indian steel sector during next fiscal year. The operational and financial challenges coupled with lower demand for steel from reality sector are the key drags, the report stated. The profitability of steel producers during the upcoming fiscal depends on regulatory support and government spending. The anticipated low capacity utilization by steel mills and the muted demand growth between 4% and 5% may keep cash flows and profitability of many steel companies under pressure.

The key sectors to drive steel demand growth in FY18 include construction, capital goods and consumer durables. However, the impact of demonetization on realty sector is likely to persist, said India Ratings report.

India had added around 10 million tonnes of new steel capacity in FY17. New capacity of around 6.5 million tonnes is expected to be added in FY18 as well. Over the next five years, a total of around 25 million tonnes of steel capacity is likely to be added in the country. However, production is expected to grow only by 8-10 million tonnes per year in FY18. The capacity utilization is expected to remain low at around 75% during the fiscal.

Regulatory support will be the key to companys’ profitability in FY18. The imposition of minimum import price (MIP) on a range of steel products in February last year had helped steel companies to report better operating profits. Meantime, the country recently announced its decision to impose retroactive antidumping duties on certain steel products originating in or exported from China, Japan, Russia, Korea, Brazil and Indonesia. The Ministry statement issued Friday states that duty of $478 to $489 per tonne will be imposed on hot rolled alloy and non-alloy coils, whereas a duty of $561 per metric tonne will be imposed on hot rolled plates. The duties will be effective for five years beginning August 8^th last year.