Indian steel industry continues to show better results owing to rising steel prices and higher export demand. Steel companies reported higher profits in last quarter on better NSR (net sales realizations) and improved output. But what is driving this rally and how long will it sustain, remain a big question.
In this report, SteelMint have tried to find out how long steel has performed in the last quarter based on production, exports, imports and prices.
Prices
SteelMint in the price assessment analyzed that during Q1 FY18 against Q1 FY17, the long steel prices has increased by INR 4,500-4,700/MT (USD 70-74). This increase is not in the proportion with flat steel which increased by INR 4,800-5,000/MT (USD 75-78) during the same period.
Long steel (also known as construction steel) demand remained low specially after demonetization and new Real Estate Regulation Act (RERA), which has slowed down private construction projects.
Production
High demand for flat steel in global market and better realizations have prompted large steel mills to shift their production from long to flat steel.
In Q1 FY18 against Q1 FY17, India’s long Steel production increased by 1.7% and flat steel by 1.5%.
Vizag steel, India’s largest re-bar producer reported an increase in long steel production to 0.85 MnT in Q1 FY18 against 0.71 MnT in Q1 FY17.
Exports
The exports for long steel from India has gained pace owing to the reduced gap between the billet and rebars in the global market and also due to the higher offers by the other exporting countries.
Long Steel exports from India grew 3 folds to 0.51 MnT in Q1 FY18 as compared to Q1 FY17 at 0.18 MnT.
China and Turkey the major long steel exporter have recently increased their export offers to all time high, opening the doors for the Indian long steel exports also for the good quality product at the cut throat prices.
Imports
India being the third largest producer of steel after China and Japan has also being importing goods from past few years but imports in India has been gradually reduced after the government introduced provisional duties on bar and rod. Also, the buyers prefer good quality material which is produced in the domestic market. So the buyers opt domestic purchase rather than importing the material.
The imports of long steel have fallen to 0.18 MnT in Q1 as compared with 0.31 MnT in Q1 FY17.
Outlook
The domestic as well as the export market to remain positive owing to increased exports from India which in turn will lead to surge in the offers both in domestic and global market.
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