 "Despite protection, steel firms get little room to raise prices")
Not much is expected to change in pricing for the domestic steel industry, even as the government renews steps to protect it from foreign competition.
On Thursday, the latter announced an extension of the specified minimum import price (MIP) on 66 steel products at the same rate for another two months. Alongside, there was a provisional recommendation for an anti-dumping duty on some hot and cold rolled products. “We can expect a notification levying anti-dumping duty any time, as the preliminary findings have been already established,” Sanak Mishra, general secretary of the Indian Steel Association, told this newspaper.
Anti-dumping duty imposition would mean a stronger and longer duration measure. Even so, brokerages feel as supply is much higher than demand, price growth would be largely flat in even the peak demand season, starting October. Usually, June to September is considered a lean period for steel demand, as industrial activities take a back seat in the monsoon.
This means, like the June quarter, producers are likely to have volume-driven revenue growth, not value-driven. “Domestic companies will be able to grab consumption largely coming from import substitution,” said Shah.
“MIP has not helped adequately. Circumvention has happened to a large extent,” Seshagiri Rao, group finance head at JSW had recently said. The company had posted a better bottom line in the June quarter mainly because of lower costs; realisations grew only about one per cent.
India's steel import fell only 30 per cent in the June quarter, much lower than the expectation of a 50 per cent decline. In the past few months, importers brought material under advance licence free, circumventing the MIP, and paid a penalty by not re-exporting, still cheaper than bringing at MIP.
“Importers and traders are smart. A huge onus would lie on the Customs once all the measures are implemented,” said a senior analyst, on condition of anonymity.
Traders reject the charge. “There is no circumvention; producers are falsely putting allegations. So many traders have had to shut shop because of the MIP,” said a trader, on condition of anonymity.
On Thursday, the latter announced an extension of the specified minimum import price (MIP) on 66 steel products at the same rate for another two months. Alongside, there was a provisional recommendation for an anti-dumping duty on some hot and cold rolled products. “We can expect a notification levying anti-dumping duty any time, as the preliminary findings have been already established,” Sanak Mishra, general secretary of the Indian Steel Association, told this newspaper.
Anti-dumping duty imposition would mean a stronger and longer duration measure. Even so, brokerages feel as supply is much higher than demand, price growth would be largely flat in even the peak demand season, starting October. Usually, June to September is considered a lean period for steel demand, as industrial activities take a back seat in the monsoon.
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JSW Steel has raised its annual capacity to 18 million tonnes from 14 mt earlier. Tata Steel’s units at Kalinganagar are adding 3 mt to the market. Essar Steel and Bhushan Steel are also raising capapcity. “So, with supply far higher than demand, we do not see local players getting any pricing power despite these (protection) measures,” said Ritesh Shah, senior analyst with Investec Securities.
This means, like the June quarter, producers are likely to have volume-driven revenue growth, not value-driven. “Domestic companies will be able to grab consumption largely coming from import substitution,” said Shah.
“MIP has not helped adequately. Circumvention has happened to a large extent,” Seshagiri Rao, group finance head at JSW had recently said. The company had posted a better bottom line in the June quarter mainly because of lower costs; realisations grew only about one per cent.
India's steel import fell only 30 per cent in the June quarter, much lower than the expectation of a 50 per cent decline. In the past few months, importers brought material under advance licence free, circumventing the MIP, and paid a penalty by not re-exporting, still cheaper than bringing at MIP.
“Importers and traders are smart. A huge onus would lie on the Customs once all the measures are implemented,” said a senior analyst, on condition of anonymity.
Traders reject the charge. “There is no circumvention; producers are falsely putting allegations. So many traders have had to shut shop because of the MIP,” said a trader, on condition of anonymity.