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July steel consumption falls 7% in second straight dip

 PTI |  2016-08-09 23:14:19.0  |  New Delhi

July steel consumption falls 7% in second straight dip

India’s steel consumption declined for the second-straight month in July falling over 7 per cent to 6.3 million tonnes (mt) as compared to June. According to the latest data from the Joint Plant Committee (JPC), part of the Steel Ministry, “Consumption in July 2016 (6.289 mt) was up by 1.1 per cent over July 2015 but was down (by 7.4 per cent) over June 2016.” 

Similarly in June this year, the demand for the metal, stood at 6.8 mt, down by 4.3 per cent over June 2015 as well as down by 8 per cent over May 2016, the JPC said. However, on the brighter side, consumption of total finished steel in India - world’s third largest steel maker, grew albeit marginally by 0.5 per cent in April-July 2016-17 to 26.2 mt over same period of last year.

During the first four months of 2016-17, crude steel production was 31.8 mt, up 5 per cent over same period of last year, the committee said. The production in July 2016 stood at 8.1 mt, which was up by 5.6 per cent over July 2015 and by 0.1 per cent over June 2016, it added.

Total finished steel stood at 2.4 MT during April-July, a decline of 34 per cent over same period of last year. “Imports in July 2016 (0.56 mt) was down by 46 per cent over July 2015 and by 11.4 per cent over June 2016. India remained a net importer of total finished steel during this period,” the JPC said. Exports were up by 8.7 per cent in April-July at 1.7 mt over same period of last year, while outbound shipments last month stood at 0.5 mt, up by 7.6 per cent over July 2015 but declined by 13.2 per cent over June 2016, it added. 

Meanwhile, the extension of minimum import price (MIP) for the next two months is unlikely to provide much relief to the domestic steel players, especially those with a large presence in the flat products category, rating agency Icra said.

MIP II is unlikely to provide the earlier level of relief (present in MIP I) to the domestic steel industry due to the exclusion of non-alloy HR and CR flat products. Though HRC (hot-rolled coil) products would continue to get benefit of SGD (safeguard duty) protection, they remain vulnerable to the risk of international price declines, it said in a report.

“The extension of MIP for the next two months is unlikely to provide much relief to the steel players, especially those with a large presence in the flat products category, given the fact the share of 173 products under MIP I in India’s total steel imports was significantly higher (95% in FY16) than that for 66 products covered under MIP II (29% in FY16),” the rating outfit said. On expiry of the six-month validity of MIP levied on steel imports, the Union Government last week extended the scheme by a period of two months.

As against 173 products covered by the MIP, imposed in February 2016 (MIP I), the recent notification (MIP II) covers only 66 steel products. Notable exclusions in the list are hot rolled (HR) and cold rolled (CR) flat products with width of more than 600 mm and other alloy steel products such as boiler quality and high pressure steel. Icra estimates that for HR flat products not covered under the MIP II scheme, domestic prices are currently trading at a discount of around USD 70/mt (14% of domestic HRC price) as compared to the landed cost of imported HRC from China.

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