Indian Steel Makers to Benefit From Chinese Increasing Domestic Demand

Indian steelmakers have now trained their guns on the export markets. If the current trend persists for the remaining three months of the current fiscal, India might become a net exporter of steel after a gap of two years. The reversal of the trend is mainly due to two reasons – china’s picking up of demand and India’s anemic domestic consumption growth.

Sensing that a void in the area of steel exports was in the making with the Chinese decision to prune production, Indian steelmakers were looking to bridge the gap for the export markets. This has helped them to raise their exports by nearly 58% in the first nine months of the current fiscal. Their ambition should further fuel by the fact that China will produce more in 2017, but it will also use most of them by themselves only, bringing down global surplus.

On the other hand, though India’s domestic demand has been growing, but the pace is slow and lower than India’s rate of growth in capacity addition. Since steelmakers are neck-deep in debt and the industry, as a whole, is the second highest contributor to the NPA in the banking system, they had to focus on the export market in order to survive. They also wanted to cash in on the situation since home turf was well protected thanks to government’s series of successful supports to rein in imports.

However, the New Year may go by well on the export fronts for the domestic firms, but they should work harder to make their presence felt more in the export markets. They should beat competition by improving on their competitiveness. They should bring down their cost of production and reliance on imported coking coal or other raw materials for that matter. Government can also help them with some sops for boost in exports.

China Flat Steel Exports:

​Quantity in MnT
Exports of CY17 is Expected
Source -SteelMint Research​