Following the minimum import price (MIP) announcement, flat product makers have increased prices marginally by 4-5% or around Rs 1,500 per ton even as prices had dropped by Rs 8,000 per ton since imports have surged to test the market, an industry source said.
“Steel prices have dropped by almost Rs 8,000 per ton since the time imports have surged. Imports are growing at the rate of 60% year-on-year. Imports have surged because of the glut scenario in China, which is facing an economic slowdown,” the source said.
“According to an MIP announcement, import floor prices of HR coils would be around $445 per ton plus an import duty or an increase of around Rs 10,000 per ton but flat product prices have gone up by only Rs 1,500 per ton,” he said, adding that the industry is adopting a wait-and-watch stance. The pre-MIP ruling price for HR coils was around $300 per ton. So, the difference comes to around Rs 10,000 per ton.
Indian steel-makers have made huge investments and increased capacity calculating the estimated demand growth, which is more or less in line with the current domestic supply.
However, imports have jeopardised the growth and lower price/revenue realisations have made all the major steel-makers like JSW, Tata Steel and SAIL incur losses.
“This situation can’t continue for long considering the huge exposure of the banks to the steel sector, a major infrastructure segment of the economy,” sources added.
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