India’s HRC Export Offers Remain Unchanged

Indian steel mills hold HRC export offers despite low buying interest.

With China’s currency devaluation, prices of Chinese HRC lowered further by USD 5/MT, making HRC prices to USD 325/MT, CNF India basis. However, Indian HRC manufacturers have kept their export offers unchanged. 2.5 mm grade HRC is being offered at USD 375/MT, FoB India basis.

As per trade sources, there is no major buying interest for Indian exports in the global market because of intense competition from cheaper Chinese, Korean, and Japanese offers. 2.5 mm grade HRC is being offered at USD 310/MT, FOB China, and USD 330/MT, FOB Japan and Korea.

Trade Barriers

Other than India, several countries have increased trade barriers against cheap Chinese steel imports. Although Indian government has increased import duty by 2.5% on Chinese steel products bringing it up to 12.5%, it will have little any impact on imports because of the significant gap between Chinese and Indian steel prices. Also, out of the total HRC imports, about 42% is contributed by Japan and Korea where import duty has no impact owing to FTA signed with both the nations.

Though Indian steel players are demanding imposition of safeguard duty on HRC, government’s decision on the same is pending.

Cost of production

Indian manufacturers are unable to compete with cheap imports from China owing to high cost of production. Crude steel production cost in India is 1.4 times higher than in other parts of the world. The shortage of key raw materials, iron ore and coal, have pushed the Indian steel prices higher than other countries.

A balanced approach

Thus, only measures like import duty or safeguard duty are not likely to protect the domestic steel industry which is reeling under pressure. A balanced approach of trade barriers combined with controlled cost of production will help the Indian steel manufacturers to counter the influx of cheap imports.

HRC Exports from Apr’15 to Jun’15

Source: JPC