You are here: Home » Economy & Policy » News
Business Standard

Competition between Indian, Chinese steel players to intensify: Icra

The competition between Indian and Chinese steel players could intensify at global level, amid subdued steel demand in China, according to Icra

Steel Market

Press Trust of India  |  New Delhi 

metals, commodity, steel prices

The competition between Indian and Chinese steel players could intensify at global level, amid subdued steel demand in China, according to Icra.

In China -- the largest steel consuming country -- steelmakers could brace for an extended period of weak demand as the economy goes through the process of rebalancing of an overheated property market, which was a key growth engine driving the country's steel demand for the last two decades, the ratings agency said in its latest report.

According to Icra, in 2020-21, China emerged as the single-largest importer of steel from India. However, with the Chinese steel demand growth waning in the current fiscal, the share of steel exports to China by Indian mills has plummeted to just 8 per cent in the first half of the ongoing fiscal from 30 per cent in the preceding financial year.

"As demand dries up back home, a steadily rising trend in Chinese steel exports suggests that competition in the export markets between Indian and Chinese mills could intensify going forward," it said.

The demand has been affected as a few Chinese property developers faced financial issues, and the Chinese property industry accounts for around 15 per cent of global steel demand.

To prevent the housing market from overheating and to mitigate broader systemic risks to its economy, the Chinese government introduced the "Three Red Lines", which put in place a mechanism to prevent the piling up of excessive borrowings on the balance sheet of property developers, it said.

Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, said, directly and indirectly, real estate related activities reportedly contribute around 25-30 per cent to the Chinese GDP and around 30 per cent to the Chinese domestic steel demand.

"Therefore, with the Chinese property sector accounting for around 15% of global steel demand, the ongoing readjustment away from a property driven model of growth in China is likely to have an adverse impact on the steel industry for an extended period. This could signal the start of mean reversion for the commodity, with spreads gradually starting to gravitate towards long-period median levels," he said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, November 10 2021. 19:04 IST