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Weak demand and competitive imports — particularly from Japan and South Korea, have taken the shine off the domestic steel sector this year.
The Indian steel industry is also facing problems owing to shortage of iron ore and continued delays in project approvals, according to H.M. Nerurkar, Managing Director, Tata Steel.
Sushim Banerjee, Director-General, Institute for Steel Development and Growth (Insdag), told Business Line that the domestic steel scenario appeared to be gloomy this fiscal.
Deceleration
“Steel consumption growth decelerated to 3.9 per cent in 9 months till December 31, 2012, from around 5 per cent in the first six month of the 2012-13,” Banerjee said.
“Things have not been OK in January either”, he added. However, indications in the second half of the current fiscal suggested that imports might come down. The first six months of the current fiscal have seen a 40 per cent jump in steel imports. “In the second half, it is likely to come down to 15 per cent”, the Insdag Director-General said.
According to market sources, imports of commercial grade hot rolled coils from CIS nations and China shot up around 50 per cent in the first half. Auto-grade cold-rolled coil imports from Japan and South Korea, however, saw higher growth in the H1 at around 70 per cent.
“This was because of import lower duty, thanks to free trade agreements,” Banerjee said. Nerurkar, in a statement on Thursday, urged the Government to take steps to discourage dumping of (steel) products.
Price increase
According to Prabhudas Liladhar research analysts, statistics of the Joint Plant Committee (JPC), the official custodian for iron and steel data in the country, suggested that steel consumption deceleration was firmly evident in December, as growth wasjust 1.4 per cent year-on-year.
“Our checks paint a weak demand outlook, given subdued order bookings, tight liquidity and dearth of enquiries,” analysts Kamlesh Bagmar and Mandar Dhavle said in a note this week.
“Despite bottomed-out prices and higher global prices, we expect restricted price increase in the range of Rs 500 a tonne in February due to weak demand, increased domestic supplies and structural shift to elevated imports,” the note added.
> jayanta.mallick@thehindu.co.in
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