India's steel industry performance dips in Aug'21, reveals JPC

The Indian steel industry's performance slumped in Aug'21 when compared with the previous month with a fall in active trading activities across the domestic and overseas market.

In Aug'21, finished steel exports volume at 1.331 million tonnes (mn t), dipping by 12% while imports (0.396 mn t) fell by 3% against July'21, as per the recent report by Joint Plant Committee (JPC). Similarly, finished steel consumption (7.811 mn t) declined by 3% along with a 2% drop in crude steel production (9.617 mn t).

On the other hand, in August, the finished steel production at 8.926 mn t posted a meagre 1% increase compared with the 4% m-o-m rise seen in July'21.

SteelMint relates below factors that impacted performance in Aug'21

1. Semi-conductor shortages weighed on auto industry demand: The issues around the supply of semiconductor chips at the beginning of CY'21 translated into a serious challenge for the auto manufactures. Few auto majors in India have posted lower sales in Aug'21 on a monthly comparison, as per company press releases, while the chip shortage led to reduced production numbers.

2. Farm equipment manufacturers posted poor sales: Unlike their peers, the farm equipment manufacturers have also faced similar woes and reported reduced sales numbers in Aug'21 against July. Other factors like uneven distribution of monsoon rain and the lingering concerns about the third Covid wave in the country can be attributed to this slump in sales.

3. Higher product prices weigh on domestic trade: Buying interest amongst end-users' and other downstream industries remained subdued due to the higher prices. For instance, SteelMint's benchmark price assessment (monthly average) of 2.5-8 mm IS 2062 hot-rolled coil stood around INR 66,500/t exy-Mumbai in Aug'21, up by INR 700/t as against INR 64,800/t exy-Mumbai in July'21.

4. Reduced demand from overseas markets: There were limited inquiries from most of the overseas countries during August. Availability of cheaper options and stringent lockdown regarding Covid-19 cases weighed on demand from the Vietnamese importers. Meanwhile, summer breaks and exhausted quarterly quotas led to reduced trade in the European market. Also, speculations regarding the China export tax levy since mid-May kept most of the overseas trade participants at bay.

The monthly average SteelMint's India HRC export index stood at $904/t FoB east-coast basis in Aug'21 as against $895/t FoB India a month back.