Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

India stainless steel (SS) sector is in a sweet spot and will reap the benefits of countervailing duty (CVD) slapped on Indonesia imports, according to a report by market research company India Ratings (Ind-Ra). There is likely to be a supply gap which the domestic players can fill to meet the projected rise in SS demand in 2021. 


A CVD of 21-23pc on SS flat products shipped from Indonesia, effective from August, is likely to aid domestic SS producers who were affected adversely in 2019. Their margins were hurt followed by a supply glut due to high Indonesian imports of SS products. 


Production volumes of SS manufacturers are likely to increase by 5pc in 2021 compared to 2019. Mills are producing flat rolled SS at 90pc plant utilization. Ind-Ra’s analysis further stated that with increased production, exports could rise too, specifically for Jindal Stainless Ltd that has facilities near port. Imports from Indonesia are expected to slide by 5-7pc in 2021. Domestic sales volume is expected to improve by 10pc in 2021 compared to the prior year. 


In FY2020, SS imports from Indonesia rose to 280,600mt while total imports stood at 742,000mt. SS imports from Indonesia was over 38pc of the total import volumes. 


Imports from Indonesia continued to increase at subsidised prices in FY20 which offset the reduction in cheap imports from South Korea and China after the imposition of anti-dumping duty levied in FY16, the report said.


An improvement in market share in domestic regions for SS flat rolled producers including Jindal Stainless, Jindal Stainless (Hissar) and Rimjhim Ispat are likely to witness an increase in their EBITDA margins. Ind-Ra has projected a growth of 150-200bp starting from second half of the current fiscal (December 2020 – March 2021). 


SS importers told Davis Index that demand from mills is on the lower side as demand for finished products has also dropped compared to the previous months. Mills are reluctant to buy scrap at the high price levels. Growth projection by Ind-Ra’s report implies that mills will have to buy scrap soon to meet the demand. Mills will also have to ramp-up production in line with the projected demand. 

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