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| Domestic steelmakers fear dumping as global prices fall | | Rates have dipped Rs 2,500 a tonne since January stronger rupee may lead to more imports |
| Shubhashish / Mumbai Feb 08, 2012, 00:22 IST |
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 The fall of Rs 2,500 a tonne in global steel prices since the beginning of the new calendar year has left the Indian steelmakers worried.
The companies, insulated by the rupee depreciation, have been holding on to prices despite a demand crunch. However, the rupee retracting closer to 49 against the dollar from over 53 in December, coupled with global price fall, has brought back fears of steel dumping in India on their minds.
Steel dumping is when producers export the metal at costs lower than the ‘fair value’, sometimes even at a loss, to clear inventories.
An official from a domestic steelmaker said, “Demand growth has been slowing down in India. The rupee depreciation of close to 20 per cent last year came as a boon, as we could hold on to our prices. However, with the rupee at 49 again, and steel prices falling globally, we could see large numbers of imports coming to India in the coming months.”
“The fall in the rupee had made imports very expensive and a lot of traders booked heavy losses on imports in September-December. But now, with the rupee easing again and global price correction, Indian shores could see more imports,” said an analyst.
Imports have constantly fallen in the current financial year. According to data provided by the Joint Plant Committee, imports fell to 481,100 tonnes in April-December, from 535,900 tonnes in the same period last year, a fall of 10 per cent.
Import of alloy steel imports, on the other hand, jumped 63 per cent, to 110,300 tonnes in the same period. Experts and analysts believe the country will continue to be a net importer of steel for quite some time. Another analyst said, “Capacity additions are not keeping pace withdemand growth and imports will continue to meet the shortfall.”
This is a particularly worrying situation for domestic steelmakers as demand growth is nowhere close to the expected figure. The Indian steel demand has been growing at 8-10 per cent every year for the past five years, except 2007-08, year of the global financial meltdown. In the last calender year, the country reported demand growth of only 5.7 per cent.
Steelmakers, however, feel the worst is behind and demand will only pick up from here on. Jayant Acharya, director (marketing and commercial), JSW Steel, earlier this month said the company even raised prices marginally ($10-15 a tonne) across product categories. Essar Steel, too, in December hinted prices should move upwards because of the raw material pressure.
However, coking coal contracts for the current quarter have been signed at 20 per cent lower rates when compared on a sequential basis. All Indian steelmakers import coking coal. The rupee fall wiped out the gains companies were expecting due to this coking coal contract price drop.
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