January steel output melts 1.5% in first dip since Sept

Steel production in India, the world’s third-largest producer, fell by 1.5 per cent to 7.4 million tonnes (mt) in January 2016 compared with the output in the same month last year.

This is the first fall since September 2015, when the crude steel production in the country had declined by 0.5 per cent to 7.3 mt as against the corresponding month of 2014. According to the latest data by the Joint Plant Committee (JPC), under the Steel Ministry, overall crude steel production fell 1.5 per cent in January 2016, impacted by a decrease of 1.7 per cent in case of other producers, while output fell by 1.4 per cent in the case of Integrated Steel Plant (ISP) producers.

However, compared to December 2015, the output was up 1.5 per cent, led by an increase of 3.5 per cent in case of ISP producers, it added.

The overall crude steel production in December 2015 stood at 7.5 mt, an increase of 0.4 per cent compared to the same month in 2014. Compared to November 2014, the overall production of the metal grew by 2.1 per cent in November 2015 to 7.3 mt, while the output rose by 4.9 per cent to 7.5 mt in October last year against the same month of 2014.

As per the latest data by global industry body World Steel Association (WSA), India’s crude steel production was 7.4 mt, a decrease of 1.2 per cent compared to January 2015. Globally, total production in the 66 countries, reporting to the WSA, stood at 128 mt last month, a 7.1 per cent decrease compared to January 2015, according to the association.

Meanwhile, with increasing demand from automobiles, railways, defence and highway sectors, domestic steel sector is likely to see a growth of 6-8 per cent in the coming few years, says a report. “On the back of strong growth expected in Architectural, Building and Construction (ABC) segment and Automobiles, Railways and Transport (ART), defence, highway segment, we expect demand growth (in the steel market) in the country to remain steady at 6-8 per cent CAGR during next few years,” SBI Research said in its Ecowrap report.

The global steel market is expected to grow at a moderate pace in medium term (3 years) at a compounded annual growth rate (CAGR) of 2.5-2.7 per cent and mainly driven by the automotive, infrastructure and construction, mechanical machinery, electrical equipment and appliances industries, it said.

China has recently announced to trim the size of its loss-making steel industry and will close between 100 million and 150 million metric tonnes (from its existing capacity of 1,200 mt) of annual crude steel production.

“This will act as a positive enabler for domestic manufacturers,” the report said. Keeping in view the present macroeconomic conditions, performance of the sector financials, integrated steel producers are somehow better placed than secondary producers and intermediaries, it said. Earlier this month, the government had imposed a minimum import price (MIP) for 173 HS codes iron and steel products between $341 to $752 per tonne for six months.

“With the introduction of MIP, large integrated steel players will be benefited by way of increase in price but what is also cause of concern is the formation of strict mechanism to check over invoicing to counter the MIP,” it noted.