With India’s car sales having hit the worst in eight years in April, domestic flat steel producers are now approaching smaller Original Equipment Manufacturers (OEMs) to sell their products albeit at same price.
“In the last three to four months, there has been a shift of about 20-30 percent of companies’ volumes to smaller OEMs as the usual large OEM customers are not lifting material,” a director at Bombay Iron Merchants Association (BIMA) told Business Standard.
Sajjan Jindal-led JSW Steel and Tata Steel are among the top flat steel producers in the country. This flat steel is used in the making of auto steel.
According to Society of Indian Automobile Manufacturers (SIAM), April was the tenth consecutive month since July 2018 when India car sales have declined. In April, the country’s car sales drop was 15.9 percent from same period last year at 2,001,096 units.
Industry officials said though steel producers are going to smaller OEMs there has been no change in price scenario but if the situation continues to remain as is, a correction in steel product price is likely.
Domestic steel producers have been continuously raising prices of steel products since February on the back of increased demand from the domestic market.
Imports of auto grade steel is another area which has taken a hit due to drop in car sales in the domestic market.
Apart from imports of hot-rolled and cold-rolled coils and sheets, galvanized steel, dual faced steel sheet and deep joint steel among others in the specialty auto steel have been impacted.
“Drop in imports of steel has taken place only in select steel products which are used in the automotive industry. Overall imports continue to remain high,” informed Sushim Banerjee, director general of Institute of Steel Development & Growth (INSDAG).
Imports of cold-rolled products from South Korea have declined by 10 percent in the last two-three months.
Meanwhile, industry officials are hopeful that once the new government takes office, there could be some demand revival in the auto market which could set business on track for domestic steel players.