In a significant development, steel prices in India have plunged to their lowest level in over three years, primarily driven by increased imports and subdued exports, according to data from commodities consultancy BigMint.
The local prices of hot rolled coils, a key material used in the manufacturing sector, averaged Rs 52,267 (USD 622.62) per tonne in July. This notable decrease reflects the shifting dynamics in the global steel market, which has particularly impacted India, the world's second-largest crude steel producer.
India transitioned to a net importer of steel in the fiscal year ending 31 March 2024. This trend has persisted, with finished steel imports reaching a five-year high in April-May, based on provisional government data. A significant contributor to this surge is the influx of steel imports from China and Vietnam. Additionally, the availability of Chinese steel in international markets has rendered Indian exports uncompetitive, further driving down domestic prices.
"This combination of increased imports and reduced exports has significantly impacted the pricing dynamics in the Indian steel industry," BigMint was quoted by Reuters.
The federal steel ministry has responded to the situation by requesting the trade ministry to investigate the influx of cheaper steel imports from China and Vietnam, a move reported by Reuters last month. This investigation aims to address the pricing challenges and protect the domestic steel industry from further disruptions.
Despite the current challenges, the outlook for the Indian steel market shows signs of improvement. Rapid economic growth and increased infrastructure spending have made India an attractive market for both local and global steel manufacturers, especially as steel demand slows in Europe and the United States.
Tata Steel's chief executive, TV Narendran, expressed optimism about the future demand for steel in India. He anticipates a pickup in demand from October through March, driven by sectors such as construction, automobiles, and railways. This anticipated increase in demand could provide some relief to the beleaguered steel industry and stabilise prices in the coming months.
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