Rising imports are not a cause for worry to Indian Steelmakers


India has experienced a steady rise in imports of steel products for every month this year since April. For a country with domestic production on the same level as India, a month-on-month increase in imports despite healthy production capacity could spell bad news. However, during this period steel exports from India were also rising proportionally, still placing India as a net exporter of steel. However from the month of June onwards, India’s steel imports continued to rise on a monthly basis, eventually exceeding the total exports.

This has raised concerns among steel industry analysts in India, but while the figures might tell one story, the actual situation is much more layered. Domestic consumption in India has been exceptional for the first part of 2017, before slowly tapering off. Naturally, an uptrend in the market influenced steel plants in India to produce more in anticipation of this trend sustaining.

India’s exports have also seen a marked increase since the taper in the July-August period, attributed to an environmentally focused decision in China to restrict production capacity to less than 50% for the winter session. This means India is now vying for markets previously serviced by the Chinese Steel Industry.

If viewed on its own, the rise in Imports is a worrying sign of dependence. But when viewed in the larger context of a supply vacuum and price rise, it doesn’t seem to be a trend with the potential to continue. The Chinese policy of limiting mills to 50% of their production capacity will only run till the end of winter in China. At that point Chinese suppliers are bound to turn their attention outwards, pressurising global steel prices. Indian Steel mills can then consolidate their domestic position, with steel consumption in India on a definite upwards trend.

1 comment:

Powered by Blogger.