Domestic steel companies focus on exports to enhance revenues

Posted on 12 April 2017
 

Source: Business Standard

Domestic steel producers will continue to focus on exports on the back of increased competitiveness in the global market and fluctuating demand back home, industry representatives said.

“Indian steel has become more competitive in the global market and since a favourable export environment has emerged, Indian steel exports are expected to remain strong in coming months,” said Sanak Mishra, secretary general and executive head of Indian Steel Association.

According to Joint Plant Committee data, steel exports more than doubled to 8.24 million tonnes (mt) in 2016-17 from about 4 mt in the previous financial year. Production, too, was 11 per cent up at 101.27 mt on year-on-year basis.

Tata Steel, Bhushan Steel, JSW Steel, Essar Steel, Jindal Steel & Power, Steel Authority of India (SAIL) and Rashtriya Ispat Nigam are some of the top producers of the alloy in the country.

Delhi-based Bhushan Steel said it garnered over 30 per cent of its total revenues from exports in the March quarter. The company is of the view that domestic demand in the sector would remain between six and seven per cent and is unlikely to breach the double-digit mark in 2017-18. “Local steel demand keeps fluctuating, hence we would continue to focus on exports for some time,” an official with Bhushan Steel told Business Standard.

Debt-laden Bhushan Steel saw its loss widen to Rs 734.04 crore in the December quarter as against Rs 693.60 crore in the corresponding period of the previous year, even as net sales rose 47.12 per cent on year-on-year basis to Rs 3611.13 crore in the period under review.

State-owned SAIL also has chalked out a plan to broaden its export basket as it aims to expand overseas sales to 10-15 per cent of its total production.

 The company is targeting to tap the export market with twin objectives of enhancing its global standards of competitiveness and setting industry benchmarks in technological advancements, it said.

Industry officials attribute the surge in steel exports to barriers imposed by other countries against cheap Chinese goods and stability in the price of coking coal, a key raw material used in the making of the commodity.

Though steel companies remain focussed on exports, most see domestic demand also picking up as the government lays thrust on infrastructure development.

 “We expect domestic demand to go up more strongly in the second half of the year as government spending will increase towards announced projects,” said Jayant Acharya, director commercial and marketing at JSW Steel. “As of now, there is a pick-up in demand in auto segment,” he added.

 Select domestic steel producers, such as Essar Steel, continue to focus on domestic market sales, while JSW Steel is striking a balance between the two markets.

“Essar Steel predominantly focuses on the domestic market. It caters to the niche product requirements of its overseas customers after fully meeting the domestic requirement. There is no change in our strategy. Meeting the domestic requirement to the extent of 100 per cent is always our objective,” a company spokesperson informed by email.

Sajjan Jindal-led JSW Steel said it would continue to keep its export contribution between 20-25 per cent of its total sales. 



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