Steel Times International July August 2022

Page 28

26

Safety Storage Efficiency Manage your steel more safely and more productively using less space with Combilift’s materials handling solutions

combilift.com India.indd – read MM OK....indd 2

INDIA UPDATE

consolidated operating profits per metric tonne for the leading Indian steelmakers came off by around US$110/tonne in the January to March 2022 quarter when compared to the highwatermark of US$ 326/tonne recorded in the April to June 2021 quarter. With coking coal consumption costs poised to spike by around 30-35% in the April to June quarter, notwithstanding the correction in Indian iron ore prices, the steel industry’s operating profits are expected to sequentially decline by US$ 80-90 a tonne in the April to June 2022 quarter. According to Jayanta Roy, senior vice president and group head at Icra Ltd, the margin pressure is likely to persist in the seasonally weak second quarter when steel prices remain under pressure. Data compiled by the Centre for Monitoring Indian Economy (CMIE) showed that steel demand in India hit a record of 105.8Mt in the financial year 2021 to 22 (April to March), a 12 % increase from 94.9 Mt reported the previous year. In the January to March 2022 quarter, however, India’s steel demand recorded the highest monthly average at 9.7Mt but sequentially slowed down to 9.3Mt per month during the April to May 2022 period, thanks to high inflation. The weak demand trend, however, is likely to continue at least until September 2022 due to a slowdown in construction and infrastructure activities during the ongoing monsoon season. Export duty levy pulls down shipment The Indian government’s recent announcement of a 15% export duty on various finished steel products covers over 95% of India’s finished steel exports and, therefore, makes exports a much less attractive proposition as mills evaluate the economics of a higher duty. Consequently, India’s finished steel exports are expected to slump by 25% in the financial year 2022 to 2023 (April to March), with the decline likely to be more pronounced in highly competitive markets like South-East Asia and the Middle East compared to Europe, where export offers typically are higher. However, with semis being kept out of the ambit of duties, their export is likely to witness a significant increase of around 40% in the current financial year, as other finished steel categories assess the impact of large export duty. Steelmakers are also exploring the possibility of switching to the export of value-added/ alloy steel categories which are out of the ambit of duties. Conclusion Following the steel upcycle, steel mills have announced largescale expansion plans which would lead to India’s steel capacity increasing by around 40Mt/yr over the next five years (2022 to 2026), which is almost double the quantum of capacity added during the previous five-year period spanning from 2017 to 2021. However, notwithstanding these sizeable expansion plans and moderation in industry earnings going forward, the steel industry is resilient enough to withstand project-related risks. � www.steeltimesint.com

18/07/2022 06:30:41


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.