After being heckled by cheap steel imports since last two years, India is anticipated to become a net exporter of steel in current fiscal year 2016-17. A country is called a net exporter, when its export exceeds import.
As per JPC data, India’s steel imports in first four months of FY 2016-17 (from Apr-Jul), stand at 2.39 MnT while exports stand at 1.70 MnT. Although, there is a marginal gap of 0.69 MnT between imports and exports; competitive global prices, good realizations in the export sales, coupled with subdued domestic demand is driving Indian manufacturers to focus more on overseas markets. Thus, country’s steel exports are anticipated to increase significantly in upcoming months, while imports are likely to remain highly restricted due to various trade barriers.
According to SteelMint analysis, India’s total steel exports for FY17 are projected to be 6.5 MnT whereas, imports are expected to be around 4 MnT, thus making country a net exporter of steel in FY17.
India was Net Exporter of Steel in 2013-14
It was two years back in FY 2013-14, that India was a net exporter of steel (after a gap of six years) with its imports being recorded at 5.45 MnT and exports at 5.59 MnT.
While higher exports during the year was driven by volatility in Indian currency and mismatched domestic demand-supply situation; imports were lower because of slowdown in domestic demand.
The Worst Two Years of Indian Steel Industry
In 2014-15, the gap between country’s steel imports and exports increased by 3.82 MnT on account of cheap imports from countries like China, Japan, Korea, and Russia.
With drastic fall in raw material especially iron ore prices globally and depreciation of their currencies against dollars, the cost of steel production of the above countries came down significantly, prompting them to export cheaper steel in various countries including India.
In 2015-16, the situation was aggravated further when India’s steel import-export gap increased to 7.63 MnT as the global steel prices touched bottom and flooded Indian market.
Although in FY 16 Indian government took actions to restrict cheap imports by increasing import duty on steel imports and imposing 20% safeguard duty on flat products, these measures failed to curb imports in to the country.
However, in second last month of FY16, i.e. in Feb’16 Indian government announced more stringent measure of fixing minimum floor price for steel imports for a period of six months, thus helping the country to curb its steel imports significantly.
After the expiry of MIP in Aug’16, government put a final nail in the coffin by imposing anti-dumping duty on flat steel products for six months and extending minimum floor price policy on other steel products for another two months thus creating a protective environment against cheap imports. Also there are high chances that these trade barriers will continue to remain in place for coming next five years.
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