Just at a time when Indian steel companies were planning to hike steel prices, following a marginal increase in the demand for steel products, a cloud of uncertainty seems to be dangling over their plan. This time, the reason of worry for the Indian steel companies has emerged from China. According to industry analysts, with steel prices declining drastically in China, steel prices in India is also expected to come under pressure.

China, one of the largest producer and consumer of steel has witnessed a 10-12% fall in steel prices to around US$510/tonne level. As a result, Indian steel manufacturers are apprehending that China could export its low-priced steel products to India.

Low-priced steel to impact Indian steel makers

Quite naturally, Indian steel manufacturers are not at all happy with this latest development. According to the industry leaders, if China exports steel to India at a lower price, it would impact the consumption of steel products manufactured by domestic steel companies.

Unni Krishnan, CEO of Lloyds Steel Industries Limited, a mid-sized steel products manufacturer in Mumbai, comments, “Production of steel in China was done without estimating the actual demand within the country, which resulted in a huge surplus of steel products. Moreover, the demand for the same has declined tremendously in China due to the global economic slowdown. Therefore, it is anticipated that China could push its surplus steel products to India, where the demand for such products is growing at present.”

Rise in demand from automotive and infrastructure

On the other hand, owing to rising demand from the infrastructure and automotive sectors in India, leading as well as mid-sized steel makers in the country have hiked steel prices by more than 10% since July.

Steel manufacturers in India were expecting the demand to grow in the next couple of months. In this context, Bharat Bhansali, Managing Partner of Satelite Trade Impex Private Limited, a mid-sized steel products manufacturer in Mumbai, opines, “Steel companies in India were planning to recover the losses by increasing the price of their products following the demand from the automobile sector. In this scenario, if Chinese steel products start entering India, then it would act as a dampener for the domestic steel manufacturers’ business plan.”

Anirban Guha