Market data on Indian steel industry do not permit such kind of incisive analysis. Around 55% of the total production is catered to by secondary sector which is yet to be convinced of the advantages of data sharing
Concept of market share has undergone a major change over the years. The volume wise performance (production/sales) is to be linked with turnover to give it a comprehensive picture. Thus a lower volume with higher realisation implying a lower market share is preferred over high volumetric output. With more capacity addition the market share is bound to drop, and so is the turnover. Looking from this angle, the turnover per unit may be a better indicator. This is comprehensively captured by EBITDA as a percentage of turnover. But compilation of unit-wise data in a large commodity market is difficult.
Market data on Indian steel industry likewise do not permit such kind of incisive analysis. Around 55% of the total production is catered to by secondary sector (Mini/EAF/IF) who are yet to be convinced of the advantages of data sharing. The category-wise production by the major producers (as a proxy for sales) is taken as the market exposure by them with secondary sector as a single group. This way of looking at the market dominance may be further improved by collecting actual sales figure from the major producers (keeping in view the various factors accounting for differences between production and sales data).
As secondary sector is assumed to produce as per market demand (with flexible production cycle), the sales data from major producers would make the table truly representative of the market dominance. Also the production data include elements of double counting (HR for CR and Pipes, CR for GP) which are on the rise in the past few years and therefore it may not be truly reflect the category wise dominance specifically with regard to HR and CR.
Although JPC (Joint Plant Committee), the single source of official statistics on steel industry, has been regularly improving its data base over the past few years, one major refinement it can immediately make in the table on producer-wise percentage share is to incorporate category-wise import data to recalculate the percentage share of the domestic steel market. This would indicate that around 12% of the domestic market captured by imported steel is primarily centred on HR/CR/GP& coated/electrical sheets and tin plates. As the total market size of bars and rods is large, a substantial increase in imports to the extent of 1.6 million tonne may not make much of a difference in individual market share. But a much lower import volume between 0.4-0.5 million tonne in coated/electrical/tin plates would take away a major chunk of market in favour of imports for these products.
The revised data may also be useful in proving that higher imports have made the domestic players to loose market share in specific categories as required in case of anti-dumping/safeguard investigations. If all other countries who are fighting trade cases can base their prime logic on the steady decline in market share in specific categories, why cannot we make our data system a little better so that it can be used not only to establish injury due to rising imports but also to enable all concerned to monitor the threat of imports and take some preventive measures.
It is further suggested that data on foreign exchange outflows (by imports) and inflows (by exports) compiled by JPC can be made into a single table that would compare category-wise outflows and inflows to reiterate our concern of rising imports with respect to exchange flows caused by trade transactions. It would also enable a fair comparison of per tonne realisation for imports and exports. This logic, if put correctly along with other facts, can well strengthen the injury analysis.
The author is DG, Institute of Steel Growth and Development. Views expressed are personal.