Appreciating rupee to negate India’s net steel exporter status

Thursday, 27 April 2017 14:59:30 (GMT+3)   |   Kolkata
       

India’s emergence as a net exporter of steel may prove to be short-lived due to the sustained appreciation of the rupee, three officials representing Indian steel mills said on Thursday, April 27.
 
The officials in question said that greater export opportunities have enabled several domestic steel mills to buck the trend of stagnant domestic demand, but the appreciating rupee has severely impacted the price competitiveness of Indian steel vis-à-vis export offers from China over the past one month.
 
Indian exports of finished steel during the fiscal year 2016-17 were up 102 percent year on year to 8.24 million mt while Indian finished steel imports declined to 7.4 million mt in the given year from 11.7 million mt in the previous year.
 
By rough estimates, earnings of companies have been hit by an average of four percent amid the impact of the 5.34 percent gains of the rupee against the US dollar since January this year, the officials added.
 
According to an official at the Federation of Indian Export Organizations, domestic steel prices have increased by about 15 percent over the past six months and this has been translated as an increase of about five percent in prices of downstream products which use steel. Now with the rupee appreciating by over five percent, there are no margins from exports at the current exchange rate.
 
The steel mill officials said that, at the current exchange rate of the rupee, export earnings are about 8-10 percent lower than earnings from domestic sales and this gap is expected to widen further if the rupee continues to appreciate, leaving domestic steel mills with no incentive to export.

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