Indian Iron & Steel Performance: H1 FY20

In H1 FY20, Indian steel industry observed decline in domestic prices owing to weaker domestic demand, liquidity issues and fall in automotive sales etc. This resulted in sharp increase in steel export volumes from India. Below are the product-wise performance snapshots:

Iron Ore & Pellets

- Indian domestic iron ore & pellet prices fell in H1 FY20 due to weak semi-finished steel prices

- Indian iron ore exports surged to 10.6 MnT on increased exports from Odisha

- Odisha govt has scheduled auction of iron ore mining leases expiring in 2020 in Nov'19

- Iron ore import volumes to India fell drastically amid competitive domestic prices and high landed cost of imports.

Coal

- Higher coal availability towards the end of FY19, had depressed CIL's price realization in coal e-auctions.

- South African Non-Coking Coal RB2 (5500 NAR) prices kept falling in H1 FY'20 on subdued demand from major market, India, due to seasonal monsoon rains, as well as increased competition from alternate origins, particularly Australia.

Semi Finished Steel

- Semi finished steel; Billet, Ingot and Sponge prices declined upto 14% due to slow down in domestic steel demand and liquidity issues in trade segment.

- Dull domestic demand and high inventories has encouraged the mills to go for exports.

Finished Steel

- Delay in funding of govt projects of construction & infrastructure sector, finished steel prices in Indian domestic market observed a decline

- Indian HRC export volumes to Vietnam increased sharply in H1 FY 20.

Outlook: Govt has undertaken series of measures like reduction in corporate tax rate, initiatives of govt. to facilitate credit availability in the system and demand uptick may keep sentiments optimistic in H2 FY20.

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