Yuan fall to compound steelmakers' woes manifold: Care

Chinese woes of Indian steelmakers will increase further following the surprise devaluation of the yuan, as it will significantly curtail the domestic players' export competitiveness, a Care report said today.
"The surprise decision by the People's Bank of China to devalue the yuan yesterday is a measure to revive its slowing economy by making Chinese exporters more competitive. For India, it's not just increased dumping of cheap Chinese steel, but also a hit on the export competitiveness of the domestic steelmakers," domestic agency Care said.
With the domestic steel capacity expanding further from the current level of about 100 million tonnes, as against 76 million tonnes annual demand, it will be extremely difficult for the Indian steelmakers to compete in the global markets against the increasing cheap Chinese exports, it added.

During the last fiscal, imports accounted for about 13 per cent of the domestic steel consumption up from 8 per cent the previous year. Out of this, 36 per cent of this came from China, thus doubling its share from previous year.
Despite its increasing global presence as the third largest producer of steel globally, the domestic steel industry over the last few years has been severely impacted by the turmoil in global demand slump.
Care expects Chinese steel demand to decline from about 768 million tonnes in 2014 to about 756 million tonnes in 2017, while production during the same period is expected to decline from about 823 million tonnes in 2014 to about 821 million tonnes in 2017.

It also expects the Chinese capacity to increase by another 60 million tonnes in the next two years, to touch 1,110 million tonnes by 2017. Over the next 2-3 years, global steel consumption is likely to grow meagerly at an annual growth rate of about 1 per cent.