Mumbai: The domestic steel industry will have to work on making pricing in the local market more competitive if it wants to rein in the rising imports, industry experts said. An oversupply in China saw the country offload steel globally, and in India alone, imports from its northern neighbor have risen to 1.1 million tonnes (mt) as of October, up 47% on year.
“The influx of foreign steel could exert downward pressure on prices, making it challenging for domestic producers to maintain favourable pricing levels,” said Brij Bhushan Agarwal, Vice Chairman and Managing Director, Shyam Metalics & Energy.
“The domestic steel industry may need to innovate product offerings, enhance efficiency, and focus on quality to counter these challenges. The cost of transportation and cost of energy also needs to be brought down to make the Indian steel makers competitive.”
India has seen up to 13% growth in consumption in 2021 and 2022. While this momentum is expected to continue in 2023, it is also proving to be conducive for imports.
“If we can compromise on prices a little, it can help in curbing imports,” said a senior executive with one of India’s largest steel makers, who did not wish to be named. “It will impact profitability in the short term, but with the current volumes, the market can absorb this,” said the executive.
Domestic producers offered rebates and cut prices of both long and flat products of steel by up to 3% in December as they looked to counter the surge in imports.
Experts believe that despite the March quarter traditionally being the strongest for steelmakers both in terms of demand and margins, they may have to look at moderating prices. “Indian steel mills are scrambling to stem the tide of imports, but their focus on quality alone won’t suffice. Price competitiveness is paramount in this market, and a failure to adapt could spell disaster for their bottom lines in FY25,” said Vedant Goel, managing director at Neo Mega Steel, a Pune-based steel trader.