Empowering MSMEs with News & Insights

China beating Indian engineering exporters by low steel prices

Updated: Jan 02, 2014 04:27:27pm
image
New Delhi, Jan 2 (KNN)Taking advantage of a turmoil in steel prices, China is at it again beating the Indian engineering industry  in terms of cost competitiveness as it has a huge advantage  of procuring basic raw material, at a much lower price than their Indian competitors, an EEPC India study has pointed out.

“The international market for steel has been witnessing turmoil but the Indian steelmakers have not been able to remain competitive amidst sharp depreciation of rupee,” engineering exporters’ apex body EEPC India has said.

After dropping from a peak in February 2011, the prices of flat/long hot rolled coils have started shooting up again since August 2012 with a sharp price disadvantage accruing to the Indian user industries such as engineering goods manufacturers.  Almost all steel makers have raised price in the range between Rs 1,000 and Rs 1,500 per tonne with effect from Jan 1, 2014.

In any case, in 2012-13 itself, the price differential between the Chinese steel products – hot rolled coils was USD 115 per tonne, long products USD 232 per tonne and semi-finished USD 124 per tonne.

What is even more worrying is the fact the domestic steel production is not going to keep pace with the Chinese output. According to estimates, India’s production would grow at an annual 6.3 per cent to reach 104 million   tonnes by 2017 from 78.6 million tonnes in 2012.


Illustratively, India’s share in world output  of Hot Rolled Products is insignificant, whereas China is producing world’s 50 per cent  of these products post 2009.

 
China‘s production is more than eight times India’s production post 2008 Similarly, China’s  production of the raw material (pig iron) is more than 14 times as compared to the production of pig iron in India. The result is higher cost of steel prices in India.

 
“The cost of steel and pig iron, which are essential raw material for their products is among the major disadvantages faced by the Indian engineering user industries,” EEPC India Chairman Anupam Shah said underscoring the need for a national raw material policy for the sector, which is amongst the top contributor to the country’s overall export basket. 


After recording smart increase up to October, India’s engineering exports fell in November by over 14 per cent. The shipments aggregated USD 4.78 billion in November as compared to USD 5.6 billion in October. 

While there is turmoil in the international market, the Indian steelmakers are struggling to remain competitive amid sharp depreciation of the rupee.

 
There is a   sharp volatility in steel prices in India in the last three years consecutively with respect to flat and long products. “This is in contrast to China, where prices have become competitive enough to exert pressure on steel products globally as the Chinese engineering manufacturers ramp up cheap exports amid sluggish economic conditions,” he added. (KNN Bureau)

COMMENTS

    Be first to give your comments.

LEAVE A REPLY

Required fields are marked *