Sluggish Demand Forces POSCO to Cut its MS Plate Offers

POSCO Indonesia cut its MS plate offers to India by USD 10-15/MT amid weak buying sentiments and possible safeguard duty by this month end.

As per market sources, POSCO Indonesia has lowered its prices by USD 10-15/MT for Indian market following weak buying sentiments. Currently MS plates, for base size 16-20 mm, are being offered in the range of USD 350-355/MT for September shipments, which was assessed at USD 360-365/MT, CNF India basis last week.

Sluggish demand in for MS plates in domestic market

Sluggish demand is one of the reasons that there is no major buying interest in India. Domestic steel demand grew at a subdued pace of 2.5% Y-o-Y in 2014-15, largely due to lower investments and delays in projects execution. In order to meet their basic demand, Indian buyers prefer cheaper Chinese offers. Currently MS plates from China are being offered in the range of USD 320-325/MT, CNF India basis.

Currency depreciation making imports costlier

With INR depreciation following Chinese Yuan correction, imports from foreign shores have become more costlier. Due to Yuan devaluation, Chinese plate exporters are getting better realizations from exports and thus they have further cut down their prices.

However, imports from China have also become expensive after the recent hike of 2.5% on imported steel by Indian government. Currency depreciation and import duty are compelling Indian importers to withold their purchases even from China. However, there is no import duty on products from Indonesia due to preferential trade agreement signed by Indian government with ASEAN countries.

Safeguard duty of 10% on Hot Rolled Products Soon- SAIL

In a statement released by SAIL (Steel Authority of India), it is expected that safeguard duty of 10% is likely to be imposed on hot rolled products soon. Safeguard duty will not only be applicable on Chinese imports, but will also be levied upon countries covered under FTA and preferential trade agreement.

Imposing 10% safeguard duty will make imports of HRC and MS plates dearer by USD 30-35/MT.

Thus, sluggish demand in domestic market, INR depreciation, and imposition of safeguard duty are the three factors which are likely to slow down the pace of import influx in India.