The Indian ferro alloys industry has failed to shake off the slowdown that has been plaguing it for months now. India is mostly dependent on imports for ferro silicon; however, amid sagging market sentiments, imports have suffered. The main reason behind such a bearish outlook is drastic production cuts by stainless steel manufacturers. Stainless steel exports dropped sharply after the United States imposed a duty on Indian stainless steel. In line with falling demand, prices have plunged rapidly.
Total ferro silicon imports by Indian producers in H1 2019 fell to 83,000MT from 103,000MT in H1 2018 – a 19% fall Y-o-Y. Indian stainless steel producers opted for production cuts in the wake of low demand for the finished products. During this period, stainless steel producers had to depend on cheap low-grade material to compensate for aggressively falling prices and deteriorating demand.
Therefore, imports from Bhutan fell by 27%. Meanwhile, imports from China increased in line with the upsurge in demand for lower grades.
|Particular||H1 2019||H2 2019||% Change|
|Imports from Bhutan||37,300||50,900||– 26.72|
|Imports from China||26,800||23,000||16.52|
|Imports from Malaysia||7,800||10,000||– 22.00|
|Total Imports||83,00||103,000||– 19.42|
What is driving imports from China?
Ferro silicon imports from China increased with the increasing preference for lower grade materials among Indian stainless steel producers keen to offset the trend of sliding domestic prices of stainless steel. Ferro silicon imports in H1 2019 were 3,800MT, higher than H1 2018 which accounted for a 16.52% rise.
However, if imports from China and Malaysia are combined, the picture that emerges is stable compared to last year. Bhutanese imports are treated mostly as domestic trade as they are customs free, with only GST being applicable as with any other domestic commodity. In the present context, producers are anticipating that prices may continue hovering at low levels with minimal shifts until the stainless steel market revives.
Meanwhile, the market wears a dismal look with producers being forced to deal at rates below production costs. The prospect of a market revival looks slim, as infrastructure projects that had taken a backseat due to the Lok Sabha Elections are yet to take off. To keep a close track of whether the Indian stainless steel and ferro silicon markets will bounce back in the near term book your seat at the International Ferroalloys Conference to be held from 12-14 September in New Delhi at ITC Maurya.