Indian Long Steel Market Analysis Q1 FY18 V/S Q1 FY17

Indian steel industry continues to show better results owing to rising steel prices and higher export demand. Steel companies reported higher profits in last quarter on better NSR (net sales realizations) and improved output. But what is driving this rally and how long will it sustain, remain a big question. This report analyzes and finds out how long steel has performed in the last quarter based on production, exports, imports, and prices.

 

PRICES

In the price assessment analyzed during Q1 FY18 against Q1 FY17, the long steel prices have increased by INR 4,500-4,700/MT (USD 70-74). This increase is not in the proportion of flat steel which increased by INR 4,800-5,000/MT (USD 75-78) during the same period.

Long steel (also known as construction steel) demand remained low especially after demonetization and new Real Estate Regulation Act (RERA), which has slowed down private construction projects.

 

PRODUCTION

High demands for flat steel in the global market and better realizations have prompted large steel mills to shift their production from long to flat steel. In Q1 FY18 against Q1 FY17, India’s long Steel production increased by 1.7% and flat steel by 1.5%. Vizag steel, India’s largest re-bar producer reported an increase in long steel production to 0.85 MnT in Q1 FY18 against 0.71 MnT in Q1 FY17. Amid weak demand and falling prices, bar and rod manufacturers remained dull in Jul’17 and started to reduce the production resulted in the sharp decline in bar and rod production

by 10% in Jul’17. Overall production in Ju’17 is estimated around 2.596 MnT slip by 10%, M-o-M. Bar and Rod Production is all time low and last this lowest production was seen on Apr’15

 

EXPORTS

The exports of long steel from India has gained pace owing to the reduced gap between the billet and rebars in the global market and also due to the higher offers by the other exporting countries.

Long Steel exports from India grew 3 folds to 0.51 MnT in Q1 FY18 as compared to Q1 FY17 at 0.18 MnT. China and Turkey the major long steel exporter have recently increased their export offer to an all-time high, opening the doors for the Indian long steel exports also for the good quality product at the cut-throat prices.

 

IMPORTS

India is the third largest producer of steel after China and Japan has also been importing goods from past few years but imports in India has been gradually reduced after the government introduced provisional duties on bar and rod. Also, the buyers prefer good quality material which is produced in the domestic market. So the buyers opt for domestic purchase rather than importing the material. The imports of long steel have fallen to 0.18 MnT in Q1 as compared with 0.31 MnT in Q1 FY17.

 

Outlook

The domestic as well as the export market to remain positive owing to increased exports from India which in turn will lead to a surge in the offers both in the domestic and global market.