Having registered the Indian steel industry’s lowest growth rate ever, most of India’s steel companies are reeling from low domestic consumption and the reduced value of the rupee. They have either cut the prices or are actively contemplating it.A far cry from earlier this year when some, including the publicly-owned Steel Authority of India (SAIL), had increased prices.
Though the official growth figure for the steel sector in the last fiscal year has not been announced by the Indian Government, most analysts here are unwilling to peg it at over 1 percent and some insist the 1 percent figure is a very charitable estimate.Reports in the Indian media have reported it to be between 0.5 to 1.5 percent. A report in the Financial Chronicle, quoting analysts, said the Indian steel sector has seen a listless growth of less than 1 percent for 2013-14.
Government indecisiveness, an election year and a delay in project approvals have all resulted in a slowdown in the auto, real estate and infrastructure sectors negatively impacting demand for steel.The FC report quoted Sanjay Jain, analyst with brokerage firm Motilal Oswal, saying that the steel sector had witnessed only 0.6 percent growth in the first 11 months of FY14. Demand continued to remain low in March, too.That was the trigger for steel companies to slash prices even before the onset of the monsoon season in June, when steel prices historically begin to correct themselves in India.Now the appreciation of the rupee against the US dollar combined with falling international steel prices has forced steelmakers to marginally cut prices of flat steel product like hot-rolled coil (HRC) in order to stay competitive with cheaper imports.
Source: Metal Miner
Elle T. // SMC Editor