Indian steel consumption during the April-July period of the current year was recorded at 33.706 million mt, up 6.6 percent over the corresponding period of the previous year, according to data released by Joint Plant Committee (JPC) under the Ministry of Steel, and the sole official compiler of steel industry data. The pace of growth in steel consumption in the given period slowed down from 9.8 percent in the April-July period of 2018, while it lost 0.2 percentage points from the 6.8 percent increase seen in April-June 2019.
Lower imports arriving in the country were also an indication of the slowdown in consuming industries. Indian steel imports in the April-July period this year were recorded at 2.496 million mt, down six percent year on year.
Steel exports in the given period were recorded at 1.474 million mt, a sharp fall of 24 percent year on year, JPC data showed, but shipments will improve in the months of August and September due to the more active sales reported in the market recently. Indian mills are actively pushing abroad not only flat steel products like HRC and CRC, but also semis (both billets and slabs) and rebar.
The main question in the international market is for how long India will be facing slower domestic demand and be focusing more on exports. Officials from the leading producers have indicated expectations of a recovery in the second half. Tata Steel CEO TV Narendran said that demand from the construction industry will show its traditional recovery at the end of the year and new measures announced by finance minister Nirmala Sitharaman will support the economy and sentiments in the steel market. And though most market participants agree that the government support will definitely bring positive results, it is unlikely that the revival will come immediately and it will take at least two months to see some improvements in the construction industry, sources said. Extremely low real demand at the moment, ample inventories at mills, discounts provided by traders and still-high steel production are among the major reasons which will prevent prices from increasing in the near future. One of the key concerns noted in the JPC’s report is the fall in demand for steel from the automobile sector, which produced 9.72 million units in the April-July period this year, down 11 percent year on year.
Seshagiri Rao, CFO and managing director at JSW Steel, said late last week that a production cut could be the answer. In the April-July period, steel output in India rose by four percent year on year to 34.815 million mt, according to the provisional figures given by the JPC. The growth rate increased compared to the 3.4 percent year-on-year rise recorded in the April-June period.