Posted on 30 Sep 2019
India’s mills are working to reduce their steel inventories as domestic production of finished steel fell for a third-straight month in August amid poor demand.
Production in August amounted to 8.39 million mt, while consumption fell to 8.23 million mt from 8.85 million mt in July, data released by the Joint Plant Committee showed.
“Every mill has decided to cut back production instead of going the whole hog,” a New Delhi-based mill source said, adding his company is producing at 85% capacity utilization, down from 90%-92% earlier.
The steel sector has witnessed a continuous declining trend in production since June, the ministry of steel said, citing low demand from sectors such as “the auto sector, capital goods, real estate and infrastructure. Global factors have also added to the present situation.”
In August, India produced 2.30 million vehicles, an 18.4% fall on the year, data from the Society of Indian Automobile Manufacturers showed.
“Demand has to return for three reasons in October. First, post-monsoon demand, second, festival demand … and third, because inventory build up in the previous months has naturally been less,” a Mumbai-based trader said
Meanwhile, Indian steel exports posted increases in both July and August.
“Higher inventory levels and subdued domestic demand resulted in an increase in the export volumes,” the steel ministry said, adding that August was the second time in 2019 that India was a net exporter of finished steel. The first occurrence was in February.
“India’s exports to Vietnam, Italy, Nepal, Hong Kong, and UAE have increased. Exports of HRC and Semis have witnessed a significant increase to these countries,” the ministry said. “July and August 2019 exports registered a significant growth of 53.8% and 113.7%, respectively, surpassing imports in volume terms during the month of August 2019.”
Although still an overall net importer of finished steel, India plans to boost its exports.
“Our overall capacity is around 140 million mt/year and our production is around 100 million mt/year. We want to be a net exporter of steel for a long period of time in the next three years,” Dharmendra Pradhan, India’s minister of steel, said on Monday.
“The order book positions of Indian mills don’t look good [at the moment] … mills still can do end-October shipment [to Southeast Asia], which is a really short lead time,” a Singapore-based trader sourcing Indian material said.
