New Delhi: The third largest economy in the world by PPP calculations, India is also the third largest steel producer after China and Japan. The industry contributes close to 2 per cent of the GDP, with demand coming from domestic industries and exports. That said, recent times have been anything but helpful to the industry, especially the pandemic, which forced not only steel plants to down shutters for nearly two years but also ancillaries and client industries. While the lockdown is behind us, and steel mills are back in action, the industry has to contend with the slower-than-usual pace of their client industries, more so the realty and construction sector.
In the context of the recent steps and outcomes, the HRC steel makers in the country have a reason to cheer with an increase of Rs 2000.00 per ton on their product says the Director of Neo Mega Steel LLP Vedant Goel. According to him, this is good news against the backdrop of the May 2022 imposition of export duty on select products, including HRC, meant to stem exports of I & S and divert them towards local industry, including construction and infrastructure projects.
Exports, he adds, were predominantly to North America and Europe. Of these, Europe was expected to be lucrative in the near future before the inevitable drop in demand due to the effects of the extended Russia-Ukraine conflict.
He continues that the export duties levied by the government were meant to revive and stabilize the Indian industry after the lockdown by diverting much-needed I & S products for its use. As an outcome, in just the month of April 2022, 1.5 million MTs of I & S products were diverted for domestic use, with hardly 5 lac tons being exported by July 2022. Compare this with exports of 13.5 million MTs in the Financial year 2022 - a quarter (25 per cent) increase over the Financial year 2021.
He reasons that with the domestic industry still reeling under the effects of the pandemic, the offtake of steel and iron across sectors has been sluggish. That, and an inadvertent build-up of unsold inventories earlier meant for exports, he explains, has led to a steady and pronounced decline in prices per ton from Rs 75000.00 in April 2022 to Rs 55000.00 in the present.
The present correction of Rs 2000.00 per MT of steel products, he concludes, is thus a move in the right direction and shall address the rightful needs of the I & S industry.