India to be net exporter of steel as firms rely on markets abroad

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India is set to become a net exporter of steel for the first time in four years, reversing a trend that saw domestic mills battling a flood of cheap imports, according to the Indian Steel Association. Shares of producers surged in Mumbai.

“This is a positive development and it would indicate that the Indian steel industry is globally competitive in terms of quality and prices,” Sanak Mishra, the association’s secretary general, said. The nation’s production is forecast to top 100 million tonne in the fiscal year starting April 1 as the big producers commission more capacity and look to boost exports, he said.

Lured by a rebound in global product prices, mills including JSW Steel and Steel Authority of India are relying on the export market to soak up excess inventories after boosting output in anticipation of PM Modi’s infrastructure push.

“India is exporting so much steel purely because of poor demand in the domestic markets,” Goutam Chakraborty, an analyst at brokerage Emkay Global Financial Services, said by phone. Indian firms are benefiting from some trade barriers against China, he said.

Exports surged almost 78 per cent in the 11 months to February to 6.6 million tonnes, while imports have plunged 39 percent to the same figure, according to steel ministry data. Output jumped 11 per cent to 92 million tonnes amid consumption growth of 3.4 per cent to 76.2 million tonnes, it said.

SAIL shares rose 5.4 percent to Rs 63.30 in Mumbai, while JSW Steel climbed 5.2 per cent to Rs 193 and Tata Steel advanced 4.1 per cent to Rs 498.50.

Top producer SAIL aims to double exports next fiscal year, the company said. It exported 6,82,000 tonnes in the April-February period, with shipments last month climbing to the best in a decade. Exports from JSW Steel, the second-biggest mill, have been as much as 26 per cent of sales in the July-December period, according to the Mumbai-based producer.

It’s a sharp contrast to a year ago, when India was inundated with cheap supplies from China, the biggest producer and exporter, with the country importing a record 11.7 million tonnes in FY16.

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