Now, India turns net importer of iron & steel

India, home to ample iron ore resources and the third biggest producer of crude steel in the world, is now a net importer of both iron and steel. In the first six months (AprilSeptember) of this financial year, the country imported iron and steel worth a little over $5.3 billion (~386 billion). Export of these was $4.2 billion (~306 billion).

This has reversed the trend of the country being a net exporter of iron ore and steel products for two years. In 201718, export of iron and steel was $11.2 billion, overshooting the import of $10.4 billion.

Between 2009-10 and 2017-18, the country's export of iron and steel logged a compound annual growth rate of close to 12.1 per cent, states a report from the India Brand Equity Foundation (IBEF), quoting figures sourced from the ministry of commerce.

The report says the change is due to robust demand in the manufacturing sector and more of infrastructure projects under implementation. The country's transition into a net importer of steel is despite the buoyancy in domestic crude steel output. In 2017-18, the latter figure was an all-time high of 102.3 million tonnes (mt), rising 4.5 per cent over a year before. A forecast by the World Steel Association projects Indian steel demand to grow 5.5 per cent in calendar 2018 to 92 mt and six per cent in 2019 to 97.5 mt. By 2019, India is also poised to dislodge America as the second largest steel consumer, it predicted. And, the firm growth in steel demand is driving higher import. The impact is also felt in iron ore, with steel companies showing increasing dependence on import. The country imported ore worth $351 mn (~25.5 billion) in FY18. This financial year has the same up-trend.

“Domestic iron ore prices have firmed up significantly in the past three months. The gap between domestically sourced and imported ore is narrowing. And, shorebased steel plants are finding it viable to import ore,” said a senior official with a steel company.

In the first five months of this financial year, iron ore import rose 190 per cent from the same period last year, to 6.3 mt, shows data from the Pellet Manufacturers Association of India. The projected figure for the entire year is upward of 12 mt. In FY18, iron ore sourced by steel makers and other end-use industries stood at 8.6 mt, about 48 per cent higher than in 2016-17. Steel plants located on the coasts have shown an increasing tendency to import the key ingredient -- they find it cheaper than buying and transporting from the domestic market.