Steel imports by India surged by a whopping 71% to touch a record high of 9.31 million tonne in 2014-15...
Steel imports by India surged by a whopping 71% to touch a record high of 9.31 million tonne in 2014-15, putting pressure on the already squeezed margins of domestic firms.
Steelmakers in India, which remained a net importer of steel for the year, have been on the wrong foot for quite some time now, mainly due to dearer raw materials while their counterparts in China, Japan and and Russia took advantage of lower iron ore prices and in some cases, sops offered by the government.
India had imported 7.38 mt of steel in 2009-10, 6.66 mt in 2010-11, 6.86 mt in 2011-12, 7.93 mt in 2012-13 and 5.45 mt in 2013-14.
Exports, however, have been at slower pace than imports, especially in more recent years. Shipments of steel stood at 3.25 mt in 2009-10 and 5.98 mt in 2013-14, only to plunge 8 % to 5.5 mt last fiscal. “Due to rising imports from countries like China, Japan and Russia, domestic steel industry is struggling to retain margins. Cost structure in these countries have significantly come down because of fall in the prices of iron ore and depreciation of their currencies against dollar. So in dollar terms, their cost of production has come down,” said Anjani Agrawal, national leader (mining and metals), E&Y.
“The government should act by initiating protectionist measures by increasing import duty. Many countries in the world have taken such measures and India should also do this. The rise in imports will impact the Indian steel industry, particularly the smaller ones because their cash flow would be squeezed,” he added.
Stating that the long-term future for the steel sector was still exciting, he, however, said because of significant jump in imports even the bigger companies will find it difficult to service their debt.
The problem of the domestic steel industry got compounded with the subdued demand. Though the last fiscal was better compared to the previous one, it still remains below potential. Real consumption of the alloy grew by 3.1% to stand at 76.35 mt in the last fiscal compared to 59.34 mt in 2009-10, 66.42 mt in 2010-11, 71.02 mt in 2011-12, 73.48 mt in 2012-13, 74.09 mt in 2013-14.
However, pinning hopes of a better demand days ahead, they continue to raise their output. Production for sale saw a steady rise to 88.12 mt in 2014-15 from 60.62 mt in 2009-10, 68.62 mt in 2010-11, 75.69 mt in 2011-12, 81.68 mt in 2012-13 and 87.67 mt in 2013-14.
Steel imports to India attract duties between 5% and 7.5%. Domestic industry has been clamouring for raising the duty to at least 10%. The steel ministry has also written to its finance counterpart to raise the duty.