Optimism in the Auto industry is likely to improve the cold roll product consumption in India.
Flat Steel industry is active as downstream products like Cold Rolled Coils & Sheets have registered a good demand from the automobile industry. After a brief period of hibernation, the industry is now looking to spring back for a new start. The Auto sector is exuding confidence for Flat Steel manufacturers as the latest sales numbers from the auto industry seem to be quite encouraging for the steel manufacturers.
Many believe that the consumption of flat steel products from this sector is likely to drive the demand for flat products in the next few quarters. One of the secondary manufacturers based in Maharashtra confirmed the reviving demand from the auto space which has led to rise in demand for CR products. On the contrary, many traders based in NCR region negate this view. They believe that it’s too premature to comment on whether the actual demand from the auto sector has returned back.
Industry experts view that the extension of the excise duty cut on automobiles till December and improving sales numbers are positive triggers for the industry which infact has led to revival in confidence for the manufacturing sector. India produced around 5 MnT of Cold Rolled Steel between January & May this year. As per industry sources, the consumption of Cold Rolled Steel between April-May in 2014 registered a 9.5% growth as compared to the same period last year.
As evident from the graph, it can be said that exports of CR products has declined over the period post March; whereas, imports for CR products have increased within this time. It can be possibly said that there has been some recovery in demand for the CR products in the domestic market which has led to rise in imports and a simultaneous fall in exports within the said period.
Meanwhile, correction in international prices mainly in China still continue to hang over domestic steel manufacturers who are unable to increase any prices further.Flat Steel market had been mulling for imports of Hot Rolled products from China as domestic prices fell below USD 510 levels. Steel 360 while talking to an importer based in Mumbai confirmed that there has been improving orders for HR Coils from China.
The fate of Flat Steel industry lies on a string of policy reforms expected to be initiated by the new government in power. Issues like delay in payments from government projects , lack of clarity on issues of mining & availability of raw materials, tax issues are going to be crucial factors which will decide whether really ‘Ache Din Aagaye hain’ (Good days have arrived).