Industry associations in India have sought rationalization of steel prices considering the Rs8,000-10,000/mt rise in prices since mid- July month. After the Federation of Punjab Small Industries and the Federation of Indian Mineral Industries, the Federation of Industrial and Commercial Organisation (FICO) has approached the government to control a hike in steel prices. FICO cites this increase as artificial has urged the government to appoint a committee for the regulation prices.
These industry bodies are also of the opinion a ban on steel exports should be levied to support the domestic manufacturers in the spirit of India’s motto -‘vocal for local’.
Indian steel prices have increased driven by bullishness in raw material prices for the last few weeks. As a result, medium, small-scale steelmakers, and secondary steel players are facing a huge shortage of semi-finished steel. Primary steel mills are inclined to supply material only to leading traders who can withhold sales till prices increase further.
The steep increase has resulted in huge losses for steel-related industries, mainly since the pending orders booked considering previous price levels are yet to be completed. MSMEs in the auto and steel sectors are struggling to deal with surging prices as they have been forced to purchase steel at increased prices. Additionally, with the economy being affected, they are also unable to pass on the hike to end-users.
The Federation of Punjab Small Industries is an association of about 1,000 small and medium-size finished steel consumers. These mills consume about 50,000mt per month of hot-rolled coil (HRC), cold-rolled coil (CRC), wire rods, and structural steel such as rounds.
High finished steel prices, sales weak
Davis Index had earlier reported about steelmakers’ plan to hike HRC prices by Rs2,000/mt effective Sep 1. Prices rose to Rs42,000-42,500/mt delivered mill, up Rs8,000/mt from mid-July. In the export market, Indian HRC offers are at $540-545/mt cfr Southeast Asian buyer.
International iron ore prices for 62pc ferrous content jumped 2.10pc to $129.92/mt cfr China on Sep 3, amid a healthy outlook for steel, largely a seasonal strong demand for HRCs.
Industry seeks policy support
The Indian Engineering Exports Promotion Council (EEPC) has also requested immediate policy support for the rejuvenation of the economy. The government has thus imposed restrictions and antidumping duties imports of flat steel from China, Vietnam, and South Korea at lower than fair market value. Firm raw materials prices have rendered Indian exporters uncompetitive in the global market.
The Federation of Mineral Industries (FIMI) has alleged some miners of illegally exporting iron ore pellets, though only Kudremukh Iron Ore Company Limited (KIOCL) is allowed to export the material.
To make enough raw material available for the domestic industry and reduce exports, the Indian government has announced limits on benefits under the Merchandise Exports from India Scheme (MEIS) for shipments valued at or below Rs20mn ($0.27mn) between Sep 1 and Dec 31. Steel exporters could have to bear nearly Rs600/mt ($8/mt) loss due to non-availability export benefits in the coming days, said a steelmaker based in North India.