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Indian steel firms slash prices amid rising imports to protect market share
Industry News- Sep 27,24
The recent capacity expansions by major players like JSW Steel, Tata Steel, and Jindal Steel and Power Ltd (JSPL) have come online amid a slowdown in demand, leading to an oversupply in the market.
Indian steel manufacturers have cut prices to safeguard their market share as they face increasing pressure from a surge in steel imports. The price of hot-rolled coils (HRC) dropped to a four-year low of Rs 47,100 per tonne this month, marking a 5% decline from August.
The cost of imported steel is now highly competitive, with the landed price of Chinese imports at Rs 46,874 per tonne and South Korean imports at Rs 46,838 per tonne. This has narrowed the price gap to just Rs 226 per tonne and Rs 262 per tonne, respectively. Typically, domestic steel companies charge a premium of Rs 1,000-2,000 per tonne for quick delivery, compared to a 45-day wait time for imports from China.
The recent capacity expansions by major players like JSW Steel, Tata Steel, and Jindal Steel and Power Ltd (JSPL) have come online amid a slowdown in demand, leading to an oversupply in the market. Additionally, NMDC’s entry into the steel business has intensified competition, further disrupting the supply-demand balance and putting more downward pressure on prices.
Priyankar Biswas, Research Analyst, BNP Paribas India, noted that with the sharp decline in domestic prices and a rise in Chinese HRC import prices, Indian HRC is no longer priced at a premium over Chinese imports. Meanwhile, rebar prices, primarily used in construction, have fallen by Rs 600 per tonne but remain at a Rs 3,000 per tonne premium to HRC. The increase in rebar's premium is attributed to a supply disruption at Rashtriya Ispat Nigam, where two of its three blast furnaces have shut down, and production at the third is hampered due to shortages of funds and raw materials, especially coking coal.
Jathin Kaithavalappil, AVP Institutional Research, Choice Broking, highlighted that the dual challenges of weak demand and low prices are likely to make Q2 difficult for the domestic steel industry, even as India continues to be a net importer of steel. While the timing of a recovery is uncertain, Kaithavalappil sees potential for a rebound in the latter half of the year as infrastructure projects resume and global demand stabilises.
(Business Line)
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