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Over Supply and Lower Steel Demand of India

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by - 7/17/2020 3314 Views

India Ratings and Research Department report says Overall spreads of the Indian steel industry for both Hot Rolled Coil (HRC) and Rebar

India Ratings and Research Department report says Overall spreads of the Indian steel industry for both Hot Rolled Coil (HRC) and Rebar are expected to fall in the second quarter of the financial year 2021, with steel prices falling further due to oversupply. By easing lockdown restrictions, the domestic steel production will gradually increase, while demand for steel will not increase, and domestic GDP for HRC and rebar is likely to decline, said Ind-Ra.

South Africa’s Export ban on Ferrous and Non-Ferrous Scrap Metal 

To protect domestic production, the South African government has banned all exports of iron and non-ferrous scrap metal for two months. Scrap Metal exports that have already received export permits or have applied for permits before July 3 will be allowed to progress. The move is in response to a demand from South African scrap consumers that there is a shortage of scrap metal at affordable prices in the country, despite current measures to prioritize domestic buyers.

Does South Africa’s Export ban hit India?

India is considered to be the largest consumer of South Africa’s scrap metal. The export ban is another significant hurdle in supplying India with the largest consumer of South African scrap metal. South Africa is the fifth largest exporter of ferrous  scrap to India in 2019, accounting for 416,000 tons or 5.9 per cent of India's imports. However, low availability has not yet made a big impact in Indian scrap prices as demand in India has been reduced as a result of the Covid-19 pandemic.

UAE’s Export Ban and Impact on India

The Ministry of Economy of the United Arab Emirates has announced a ban on the export of ferrous scrap and the Abu Dhabi Department of Economic Development (ADDED) has recently issued a circular: “All related and registered facilities in Abu Dhabi are prohibited from exporting iron scrap, waste paper scrap and cardboard scrap ”. This UAE ban is for a period of 4 months from May 15, after which it can be extended. The Export ban mostly affects India and Pakistan, who solely rely on the United Arab Emirates for its ferrous scrap needs. The United Arab Emirates supplies about one-fifth of India's ferrous scrap imports. For now, the impact may be less noticeable as the nation is less likely to buy scrap due to the pandemic lockdown.

Steel Demand and Production in India

JSW Group chairman Sajjan Jindal said in an interview Rural India is showing positive signs, while urban India is slowly becoming infected. In the automobile industry, demand is still weak. Four-wheelers now have just 30% capacity, heavy vehicles 10%, tractors perform better. We still work primarily on exports - 50% on JSW. Although we can see some improvements in the production month on a monthly basis, the big steel players say they are operating at a lower level of consumption and due to lower domestic demand; companies have increased steel exports, mainly to China on the lower margins.

Demand in India will increase in August or September. However, the latest report, says Shredded Scrap, Index, import, CFR Nhava Sheva, India at $279.17 per tonne on July 10, up from $270.18 per ton a week. The current price of UK shredded scrap for India is $280/MT and UK HMS 1 & 2 at $257/MT. From West Africa to CNF India for HMS 1 & 2 at $244

Boycott of Chinese products by JSW Group chairman

JSW may have direct and indirect imports of more than $ 1 billion from China. To control it, we recently placed a section on our purchase orders stating that no goods should come from China. Our focus is not to import any goods from a country that is not friendly with India, especially China and Pakistan. At JSW, we used to import 100% refractory scrap from China and now we have already created an alternative source of supply. We have taken orders from Brazil and Turkey and some from India. Within a span of three-six months, the cost must be neutral. New products will arrive by October.


Find visually video summery on this at https://youtu.be/JxjzkhpQJvM

Category : Metal

Tags : India Steel Industry, Scrap Report, Scrap Price, Recycleinme, India Steel Industry Analysis, Indian Steel Scenario, Scrap Import, HMS 1&2, UAE’s Export Ban, South Africa’s Export ban

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About Benny Jebaraj

For the past three years I have been working for RecycleinME .To help our valued members of RecycleinME, I involved in researching the current market trend of various scrap materials.more info


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