Capacity utilisation by steel companies falls to a four-year low

At the core of the heightened demand for a higher tariff wall, in the form of safeguard duty, on steel imports is the relative uncompetitiveness of the domestic primary steel makers. The world steel supplies remain robust, making imported cost of the alloy cheaper, even as domestic producers complain of low profitability.

At the end of November, domestic HRC (hot rolled coil) prices were trading at a significant premium of $12-16/MT compared to the landed costs of imports from China and 

Japan. According to analysts, import pressures are unlikely to alleviate in the coming months unless there is a meaningful recovery in international steel prices, which at this juncture looks improbable.

The government has a difficult decision to make. On the one hand, it can’t leave the primary steel players to face import competition, when all of them have lined up capacity addition plans. On the other, higher steel prices will exert inflationary pressures, causing price rises across the downstream steel units, and various user industries.           

The current fiscal year may see a four-year low capacity utilisation level of 78% in domestic steel industry. This is even as large steel companies are already on a major capacity expansion drive, pinning hopes on the strong infrastructure investments in the Indian economy, and a buoyant construction sector. Medium-term forecasts of steel demand in India are quite bullish. 

Going by the latest data from the steel ministry, India’s steel imports rose by over 41% to 4.7 million tonnes (MT) in the first six months of the current fiscal compared with 3.33 MT in the same period last fiscal. On the other hand, exports in the comparable period dropped 36% to 2.31 MT from 3.6 MT a year ago. After many years, India became a net importer of steel in FY24. The trend continued in the first six months and is expected to continue for the entire fiscal as well, making India a net importer for two consecutive years.

Apart from direct exports, China uses third-party routes through ASEAN nations to dump products in India. China, which produces more steel than the rest of the world combined, contributes around 30% of steel imports to India. A property crisis has battered the domestic demand, leading to a huge outflow of steel from the country.

 » Read More

Related Articles

Budget cuts by US firms to hit IT revenues in FY26

The Indian IT services sector is likely to face challenges in FY26 due to increasing regulatory and economic uncertainties linked to the policies of the US administration under the presidency of Donald Trump. Analysts believe that pauses in IT budgets by corporate clients, combined with these uncertainties, could delay the industry’s recovery. The proposed tariffs

Flipkart’s marketplace arm gets Rs 3,200 crore from parent

Flipkart Internet, the marketplace arm of Walmart-owned e-commerce major Flipkart, has received Rs 3,249 crore from its parent entity based in Singapore. The board at Flipkart has issued 470,773 equity shares at an issue price of Rs 69,014.7 each on a right issue basis to raise Rs 3,249 crore from Flipkart Marketplace Private Limited (Singapore)

Value creation: From cost centres to innovation hubs

By Amit Chadha For decades, India was the nerve centre of IT services, revolutionising how businesses worldwide operate. But over the past few years, a new wave of transformation has been underway — one that redefines India’s position on the global innovation map. Engineering R&D (ER&D) is becoming the backbone of India’s growth story, driving

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe
- Advertisement -

Latest Articles

Budget cuts by US firms to hit IT revenues in FY26

The Indian IT services sector is likely to face challenges in FY26 due to increasing regulatory and economic uncertainties linked to the policies of the US administration under the presidency of Donald Trump. Analysts believe that pauses in IT budgets by corporate clients, combined with these uncertainties, could delay the industry’s recovery. The proposed tariffs

Flipkart’s marketplace arm gets Rs 3,200 crore from parent

Flipkart Internet, the marketplace arm of Walmart-owned e-commerce major Flipkart, has received Rs 3,249 crore from its parent entity based in Singapore. The board at Flipkart has issued 470,773 equity shares at an issue price of Rs 69,014.7 each on a right issue basis to raise Rs 3,249 crore from Flipkart Marketplace Private Limited (Singapore)

Value creation: From cost centres to innovation hubs

By Amit Chadha For decades, India was the nerve centre of IT services, revolutionising how businesses worldwide operate. But over the past few years, a new wave of transformation has been underway — one that redefines India’s position on the global innovation map. Engineering R&D (ER&D) is becoming the backbone of India’s growth story, driving

India Inc. guarded as US tariffs loom

Large sections of Indian industry, including sectors that are seen to be relatively more vulnerable to the reciprocal tariffs by the US, appeared largely unperturbed on Wednesday ahead of the Donald Trump’s administration’s imminent disruptive move. Several key industries that have high interest in the lucrative US markets, including electronics, pharmaceuticals, auto parts, and gems

Benchmark indices rise ahead of Trump’s ‘Liberation Day’

A day after declining by over 1.5% due to nervousness over US President Donald Trump’s looming reciprocal tariffs, Indian stock markets put up a brave face on Wednesday, with benchmark indices bouncing back and erasing over half the losses incurred earlier in the week. The rupee, on the other hand, closed a little weak, depreciating