Lower sales on account of huge surge in imports of low-priced steel from countries including China saw steel major SAIL post a wider than estimated loss at Rs 1,528.7 crore during the October-December quarter. The country’s largest steelmaker had reported a profit of Rs 579.1 crore in the same quarter last fiscal. This is the company’s third consecutive quarterly loss.
Total income during the period declined 19.5% to Rs 8,939.1 crore.
“The company incurred a net loss of Rs 1,529 crore for the third quarter of 2015-16… primarily due to a 24% decline in net sales realisations over the corresponding period last year. Sales were adversely impacted by a huge surge in imports of low-priced steel,” Sail said in a statement.
Global steel prices have registered a steep fall over the last year to $280 from around $460, mainly due to a slowing Chinese consumption which is leading to oversupply of cheap steel into the market. “Imports into India are at an annualised rate of 12 million tonnes, which is 20% up over a very high base of FY15 when these had surged 75% over the previous year,” the company said.
The domestic market continues to suffer from the rising imports, particularly from China, Japan and Korea, at prices which are much lower than the domestic cost of production, affecting margins of steel producers in India, it added.
“The global scenario is very challenging and the demand-supply imbalance resulting in price adjustments is hurting the domestic steel industry” SAIL chairman P K Singh said.
“We are focused on ramping up production from our new units and are adopting cost-efficient strategies to improve our NSR. The recent favourable policies announced by the government and its concerted efforts to enhance infrastructure spends in viable sectors will improve domestic demand and provide some relief to the Indian steel industry,” he added.