Finished steel production in India, the world?s fourth-largest producer, rose 7.5% between April and December from a year before to 52.06 million tonne (mt), aiding a fall in imports as consumption moderates due to an economic slowdown, official data showed on Monday.
Steel imports declined by 10.2% to 4.81 million tonne during April-December, while consumption rose a modest 4.4% to 50.86 million tonne, according to the data. Exports grew 22.7% to 3.02 million tonne during the period.
In December, Steel Secretary PK Mishra had said steel demand may grow by 8% in the current fiscal through March 2012, compared with 9.9% a year before. Steel consumption has slowed so far this fiscal, mainly due to a moderation in the automobile and household appliances and less-than-expected demand from the construction sectors, an official source said. The country aims to raise its annual crude steel production to 120 million tonne in the next two years, compared with the current 84 million tonne.
Steel demand in India usually weakens during the June-September monsoon season as construction activity slows due to rains and reaches its peak after the last quarter of the fiscal.
Last month, the government raised the export tax to 30% on both iron-ore fines and lumps from 20% to discourage overseas despatches of the raw material and promote domestic steel making, potentially hitting the margins of companies such as Sesa Goa Ltd. India exported 97.64 million tonne iron ore last fiscal year.
An Assocham report says India exported iron ore worth $4.7 billion in 2010-11 and imported finished steel worth $11 billion which contributed negatively to the widening trade deficit and drained foreign exchange reserves. The tax rise will hurt India?s competitiveness in the export markets. It ships iron ore to China, unlike Australia and Brazil, the top two iron-ore producers, which sell the commodity mostly through long-term contracts.
Iron ore exporters feel that the tax hike will not play much role in increasing domestic consumption of steel. ?There would not be much impact on either production or consumption of the steel for the reason that most of the exported iron ore is fines, which is not used by domestic steelmakers,? said one of the exporters. Iron ore exports fell by 28% during April-November to 40 million tonne, according to the Federation of Indian Mineral Industries.
