Cheap Chinese steel likely to curb Indian exports next year
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India's steel exports for FY2022-23 stood at 6.72 million metric tonnes (mt), down about 50 percent year on year, while the imports were at 3-year high.
Cheaper Chinese exports will continue to threaten Indian steel makers by limiting their shipments to the European Union in 2024, away from traditional buyers Vietnam and the Middle East, if subdued demand situation lingers, according to market research firm SteelMint.
"Mills may have to raise export allocations. However, China's presence in the export markets may well remain at the level of around 8 million tonnes per month if government policies and stimulus fail to trigger a recovery in domestic demand," SteelMint said.
India's steel exports for FY2022-23 stood at 6.72 million tonnes (mt), down about 50 percent year-on-year, while the imports scaled a three-year high, according to a report from global analytics firm S&P in April. Excess Chinese dumping made Indian steel uncompetitive in international markets, hurting the margins of players such as Tata Steel and JSW Steel.
"If demand does not increase at the same pace in CY24, then there will be surplus supplies and domestic steel prices may come under further pressure, especially because inventories in the system are high," SteelMint added.
Authorities have started consultations with the domestic producers to explore strategies for reining in imports, the media reported earlier this month. Officials are also mulling to introduce Production Linked Incentive (PLI) scheme 2.0 to boost production and reduce dependency on imports. "The toughening of regulatory mechanisms and BIS (Bureau of Indian Standards) may well have the effect of reining in imports, thereby supporting steel prices," SteelMint said.
Domestic demand to cool in 2024
So far, domestic players have been riding high on the robust demand at home with a spur in infrastructure projects. However, next year will be marked by the general elections and projects may get into cold storage till a new government is formed, SteelMint said in its report.
There can be funding delays after formation of a new government and awards of construction projects may get stalled as election code of conduct kicks in, it added.
(Source : Money Control)
