While some sectors are pinning hope of demand revival soon, woes of steel companies seem to be mounting due to cheap imports from China creating an over-supply situation in the country.
The landed steel prices from China are lower by around $50 per tonne compared to Indian steel prices, across categories, industry officials said. Overall imports in India from China have gone up by 60 per cent compared to a year ago, analysts said.
“Our domestic steel prices as well as export steel prices, both are getting impacted, as China is exporting at cheaper rates to almost all over the world. In the last two months the discount offered by the companies are very high,” a senior official from Steel Authority of India told Financial Chronicle.
The official said that compared to steel prices in the Indian market the steel coming from China is lower by around $50 per tonne.
Due to cheap steel imports from China, in the country both capacity utilisation and steel prices are under pressure. China is the largest consumer of steel in the world and with the economy slowing down in China the country has surplus steel which they are selling all over the world at a cheaper price. There is 7.5 per cent import duty on steel in India and even after paying the import prices Chinese steel is being sold at cheaper rates.
Koushik Chatterjee, group executive director, (finance and corporate), Tata Steel, said, “While the group across geographical entities continue to focus on internal improvement initiatives, there are several external factors that continue to challenge the business especially declining spreads in Europe and South East Asia owing to Chinese exports and lower commodity prices and the uncertainty created on the renewal of mines in India on account of various hurdles that have the potential to impact the company if not resolved urgently.”
Source: http://www.mydigitalfc.com/