India to be net steel importer by March

India would become a net importer of steel by the end of this financial year, said Moosa Raza, president, Indian Steel Alliance (ISA), a major association of domestic steel producers.

The primary reasons fuelling the imports are rupee depreciation and rising demand in the domestic market.

Currently, the country's imports and exports are on the same level. According to Raza's estimates, net imports could be in the range of 0.5-1 million tonnes. Steel production, currently at 50 million tonnes, is likely to increase to 55 million tonnes by the year-end. Consumption would also be around the same level.

Raza said the main sectors driving the demand were construction and white goods. "The automobile segment is a little down but that is probably seasonal," he said. The rising per capita income of the middle class is another contributing factor.

The shortage of steel is likely to persist till 2012. According to estimates, the industry would add another 36 million tonnes by 2011-12 through brownfield expansion, which do not require land. "The shortage could ease then."

Raza declined to make any forecast on pricing but said that raw material prices were increasing. Over the past year, iron ore spot prices have increased 30 per cent to $120 a tonne .

JSW Steel, while declaring the company's results on Thursday, also mentioned that raw material prices and a strong demand in the international and domestic markets could keep prices firm and even move north.