India's Finished Steel Production And Consumption Drops In February 2023

India’s steel industry, like many other industries worldwide, has been affected by the COVID-19 pandemic. Despite the challenges, the country’s steel industry has shown resilience and continues to grow. However, in February 2023, India’s finished steel (alloyed and non-alloyed steel) production and consumption fell, while the country remained a net importer of steel for the fifth consecutive month.

Production And Consumption

According to provisional data from the steel ministry’s joint plant committee (JPC), finished steel production fell by 7.9% in February 2023 to 9.87 million tons (mn t). However, it was 2.9% higher than the previous year. On the other hand, consumption dropped by 5.4% compared to the previous month but was 11% higher from January 2022 at 10.1 mn t.

Reasons Behind The Drop

One reason for the decrease in consumption is the steep increase in domestic steel prices last month (February 2023), which weighed on consumption as buyers postponed bulk purchases. The Indian domestic hot-rolled coil (HRC) price rose to an about eight-month high of Rs 61,000-62,000/ton in the first half of February 2023 after mills increased prices. However, the prices slightly fell later due to low to moderate demand.

Production And Consumption During April 2022-February 2023

Despite the decrease in February, finished steel production during April-February was up by 6.2% from the previous year to 109.4 mn t. During the same period, consumption rose by 11.6% to 107.2 mn t.

Crude Steel Production

In February 2023, crude steel production fell by 2.5% from February 2022 and was lower by 9.4% from the January 2023 at 9.89 mn t. India’s crude steel output was up by 3.9% from the previous year (April 2021 to February 2022) at 112.4 mn t during April 2022 to February 2023.

Imports And Exports

Imports of finished steel climbed by 44.2% from the February 2022 to 593,000 tons in February 2023, while exports decreased by about 50% from the February 2022 to 575,000 tons in February 2023, according to JPC data.

In the last 8 months, steel imports have surpassed exports 6 times. Competitive international prices have made imports attractive in the domestic market. However, increasing global prices are likely to deter the inflow of steel in the coming months. Imports rose by 30% from the previous year i.e. April 2021 to February 2022 to 5.59 mn t during April 2022 to February 2023, while exports were down by 52% to 5.9 mn t during the period.

Exports were mainly hit by a 15% tax that the government imposed between May and November last year. Although shipments have improved since the removal of the duties, weaker international demand, especially from Europe, has kept exports in check.

Insight

The short-term outlook for India’s steel industry remains uncertain. The recent drop in finished steel production and consumption in February 2023, along with the increase in domestic steel prices, may impact demand in the coming months. However, the growth in finished steel production and consumption during April 2022-February 2023 provides hope for a positive outlook. Steel imports increase and exports decrease may also affect the domestic market in the short term.

Read more: Ship Breaking Industry Performance In 2022: High And Volatile Scrap Prices