New Delhi: Facing a double whammy of rising imports and declining exports, domestic steel manufacturers are fearing further squeeze in their margins in a stubbornly subdued domestic market.
Describing the 58 percent growth in imports and 6.6 percent dip in exports during the April-December period as "very harsh," one private sector steel maker attributed the situation to higher input costs.
"Despite a literal crash in iron ore prices globally, we are deprived of the benefit domestically. At the same time, we are to pay 2.5 percent import duty on coking coal which India does not produce.
Due to this, Indian steel makers are loosing out to their global peers.
With tepid growth in domestic consumption and large scale of imports, we are not in a position to raise price even if it was an absolute necessity. This is eating out our margins," said the spokesperson.
India, fourth largest steel maker in the world, imported 6.51 million tonnes steel during the April-December period of the current fiscal. Exports, on the other hand, declined to 4.06 MT during the period.
Steel imports are galloping because there is hardly any difference between the landed and the domestic costs of the alloy, forcing steel makers to roll over their price for two months in a row, said another source.
"Considering India's 100 million tonnes installed steel production capacity and a little over four million tonnes of exports, imports should not have been much a headache; but the problem is our consumption has not been growing in the desired proportion," he said.
According to Joint Plant Committee (JPC), a unit of the Steel Ministry, India's steel consumption grew by just 1.4 percent during April-December period of current fiscal at 55.24 million tonnes compared to 54.507 MT during the corresponding period of the last fiscal.
"The slow year-on-year cumulative growth numbers appear to reflect the lingering effect of economic slowdown and is further depressed by declining growth rate in production for sale in December 2014 as compared to same period of last year," JPC recently said.
A senior executive of another private sector firm said the government must try to contain the free-flowing imports of steel and take steps to boost domestic consumption.
Steel in India is coming in big volumes from China, Japan and Korea. While exports is a compulsion for China because of its huge domestic supply-demand mismatch; Japan and Korea are taking advantage of the free trade agreements with India.
