Even as domestic steel consumption is expected to record lower levels in the current fiscal compared to the previous years, the country has become a net exporter of the alloy, says a report.
According to rating agency ICRA, given the continuing sluggishness in the key real estate and construction sectors, the overall steel consumption for 2016-17 is likely to face lower growth than the previous year levels.
Additionally, India's steel imports have contracted by 38.5 per cent during the first 11 months of fiscal owing to various trade protection measures including anti-dumping duty, safeguard duty and minimum import price.
However, the report noted that decline in imports have coincided with strong growth in steel exports by domestic mills for the period under review, supported by an improvement in the pricing scenario in international markets.
"As against a wide gap of 7.6 tonnes (mt) in 2015-16 between India's steel imports and exports, exports have surpassed imports in first 11 months of 2016-17 by a thin margin and as a result, India has now become a net exporter of steel in the current year," ICRA senior vice-president Jayanta Roy said.
Further, ICRA has estimated domestic iron ore production to reach 190 mt, registering a growth of 23 per cent this fiscal over the same period year-ago.
"A bulk of the incremental domestic production has come from Odisha, where production is expected to cross 100 mt in 2016-17," the report said.
"However, buoyant international iron ore prices have helped arrest the slide in domestic ore prices, especially in the states of Chhattisgarh and Odisha, where prices were under pressure earlier due to oversupply," it added.
The report also noted that the state-owned miner NMDC has raised the price of iron ore lumps produced from its Chhattisgarh mines by 43 per cent between September 2016 and March 2017.
Moreover, the report said helped by better export realisations, India's iron ore and pellet exports have reached 18.6 mt in the first nine months of 2016-17, as against 2.7 mt achieved during the same period year-ago.
"Rising exports augur well for India's pellet capacity of around 90.6 million tonne per annum, which has been operating at suboptimal utilisation levels of around 50 per cent thus far," Roy said.
While domestic steel consumption picks up in the third quarter after the retreat of monsoon and consequent pick up in construction activity, this time due to demonetisation the growth for December quarter dipped by 2.4 per cent compared to preceding three month period.
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