It is a good news that India’s current account deficit at $7.2 bn has come down to 1.2% of GDP by Q2 of the current fiscal compared to 2.4% in Q1. However, the total deficit is almost double than what it was in Q2 of last FY. One of the major contributors of lowering of the CAD was lower merchandise trade deficit and here growing net steel exports played a supporting role. During the first 8 months of the current fiscal, total steel exports at 7.84 mt valued at Rs 36,339 crore was 1.67 mt more than total steel imports valued at Rs 29,616 crore. In addition to saleable steel, the total steel exports and imports data also include fittings, miscellaneous steel items pig iron, sponge iron, HB iron and ferro alloys. It is seen that during April-November’17 period, while total value of steel exports including those above related items comes to Rs 54,795 crore, the value of corresponding steel imports comes to Rs 53,160 crore, yielding a surplus of Rs 1,635 crore, which would add to the merchandise trade surplus of the country. Report says that total exports grew by more than 30% in November’17 and 80% of this rise was contributed by engineering goods, chemicals and gems and jewellery. Total imports also grew by nearly 20% in November’17 but most of this rise was due to uptick in oil imports. The current price of crude oil has already crossed $62 per barrel and the rising trend is ominous for India’s trade deficits. It is seen that non-oil, non-gold imports rose by more than 22% in November’17 and if it signals better health of the industry, it should reflect a higher IIP for the month.
Looking at the trend of steel exports and imports in the last few months, it is observed that finished steel exports which was at a level of 0.77 mt in July’17 has reached 1.01 mt in November’17 with the peak reaching in September’17 (1.12 mt), a growth of 0.24 mt in 4 months, and finished steel imports coming down from a level of 0.8 mt in July’17 to 0.6 mt in November’17, a fall of 0.2 mt. Accordingly, the net exports surplus is increasing during the last 4 months. It has also resulted in a higher capacity utilisation by the domestic producers. The rising trend in steel exports is encouraging. As steel exports are at 25-28% of total finished steel production in the global market and in India it is only 11-12%, there is a huge potential for Indian steel exports to grow in the coming years. While more exports enlarge the scope of operation of the producers and expose it to the vagaries of stiff competition in the global market, the experience can be replicated in the domestic market. The lessons learnt in areas of quality specifications, maintaining strict delivery schedules, loading and stevedoring and above all fixing of competitive prices out of strong negotiation are crucial take away for the domestic markets. However, it must be appreciated that direct negotiation with OEMs in countries abroad provide the real inputs of the sectoral health of different end-users in the global market, a lesson that is sorely missed while negotiating export deals with the agents operating in those regions.
During the first 8 months, semis, bars and rods, HRC, billets/slabs, CRC, coated products, pipes and plates comprise around 97% of total steel exports. The export basket, which was heavily loaded with plates a decade ago, currently comprises both long and flat products. This unmistakably indicates a qualitative transformation of Indian steel industry. The technological upgradation of the old mills and superior technology of the new mills have enabled Indian steel industry to attain a distinctive mark in the global market. It is heartening to note that other than the major steel producers, a few medium and small enterprises have also participated in the export of alloy and SS, billets, TMT bars, wire rods, GP/GC sheets and pipes during the period. Alloy/SS TMT and wire rods have been exported by medium-scale private steel producers. After some semblance of normality in the Euro crisis, Indian steel exporters have targeted Italy, Belgium, Poland, Spain and Turkey as major centres (27% of total exports) for bars and rods, CRC, GP/GC, plates, HRC, alloy/SS. The neighbouring markets in Bangladesh, Sri Lanka, Nepal and Myanmar importing billets/slabs, bars/rods, structurals, HRC and CRC from India account for around 15% of total steel exports. The SE Asian markets of Indonesia, Thailand and Malaysia importing semis, GP/GC, HRC, structurals, CRC, alloy/SS from India account for 11% of total steel exports. In the Middle East, Indian exports cater to UAE and Saudi Arabia (9% of total exports) for semis, bars and rods, HRC, CRC and GP/GC sheets, alloy/SS. While USA (4% of total exports) imports bars/rods and GP/GC from India, Vietnam (9% of total exports) has emerged an important destination for Indian exports of bars/rods and HRC.
Source: financialexpress.com