As per the data reported by the Joint Plant Committee real steel consumption witnessed a decline of 2% YoY in September 2012.
Even on a 3 month rolling basis, consumption growth at 2% YoY remained the lowest in the past 17 months. Steel imports decelerated, although on a 3 month rolling basis the growth was still healthy at 26% YoY, while on 12 month rolling basis the growth stood at 51% YoY.
Similarly, exports have started picking up and on 3 month rolling basis their growth was at 22% YoY, while on 12 month rolling basis the growth stood at a meagre 1% YoY. We continue to maintain our stand that in the wake of subdued demand and rising supply from top steel players, steel companies will have to increase exports and curb imports, leading to steel prices moving from import parity to export parity. We retain our Sell rating on all major steel companies i.e. TATA Steel, SAIL, JSW Steel and JSPL.
Steel import growth decelerates, but still strong, total steel imports in India stood at 0.53 million tonne in September 2012, up 9% YoY, the lowest in the past 11 months. On a 3 month rolling basis, total steel imports stood at 1.86mt, up 26% YoY, while on a 12 month rolling basis steel imports stood at 7.82 million tonne, up 51% YoY.
Steel exports rising at a modest pace
Total steel exports from India stood at 0.45 million tonne in September 2012, up 40% YoY. On a three month rolling basis, total steel exports stood at 1.31 million tonne, up 22% YoY, while on a 12 month rolling basis steel exports stood at 4.29 million tonne, up just 1% YoY.
Net domestic production growth subdued
Net steel production declined 1% at 5.49 million tonne in September 2012. On a 3 month rolling basis, total net steel production stood at 17.17 million tonne, a drop of 1% YoY. On a six month rolling basis, net steel production stood at 34.71 million tonne, a growth of 3% YoY. On a 12 month rolling basis, net steel production stood at 68.14 million tonne, up by just 3% YoY.
Consumption growth decelerating
Steel consumption declined 2% at 5.72 million tonne in September 2012. On a three month rolling basis, total steel consumption stood at 18.55 million tonne, a growth of 2% YoY. On a six month rolling basis, steel consumption stood at 36.74 million tonne, an increase of 5% YoY. On a 12 month rolling basis, steel consumption stood at 72.23mt, up 7% YoY.
Implications on steel pricing
We continue to maintain our stand that in view of rising supply from major players like TATA Steel, SAIL, Essar Steel and Bhushan Steel, domestic players will have to move towards export parity prices in order to curb imports.
Source - Money Control
(www.steelguru.com)
