Indian steel imports may keep increasing till July

Steel imports of India, which consumed around 35 million metric tons of steel in 2005, may continue increasing this month and next month due to the increasing domestic steel prices and strong demand which is expected to last till the summer monsoon. Following JSW Steel, Essar, Ispat and Uttam Galva companies, which hiked their hot rolled and galvanized coil prices last week, Tata Steel also increased its prices this week. Meanwhile, the domestic demand of India is high mainly because there is relatively a short time to carry out construction works due to the summer monsoon which is expected to bring heavy rainfalls in July. Furthermore, JSW Steel shut down its HRC mill for 30 days in order to upgrade, which will also lead to an expansion in short-supply. Current import-export policy of India is also a support for steel imports especially for finished steel products. Currently, the import duty applied to semi-finished products is 7.5 percent, while the import duty on finished steel is 5 percent, which leads market players to purchase finished steel rather than semi-finished. Because the time before the monsoon season is relatively short, the imports are expected from the surrounding countries. China is expected to play the lead role in the imports of India being the largest steelmaker of Asia. Furthermore China is developing commercial relations with India day by day. Chinese companies have recently won a large gas pipe tender in India. Furthermore, recent reports stated that Chinese and Indian companies are considering to mutually develop an iron ore mine in Indonesia. Thailand may also increase its steel exports to India due to the oversupply situation in Vietnam, which is a major import market for Thailand. Iranian steelmakers have also increased their exports lately. As a last example, Isfahan based Saba Steel announced an increase in its exports. However, Pakistan and UAE are the major export destinations for Iran. Furthermore, Iranian government is considering to remove tax on steel imports in 3 to 4 months on the other hand, which indicates that the country currently faces a supply deficit. The strong domestic demand in Russia and other CIS countries is expected keep exports from these countries to India at a short level this month and next month. Not only the quantity but also the prices of imports may continue to increase until the end of June.