IIP for March 2021 presents a higher prospective sector image. The low base of last March as the nation was dipped in the menacing virus could be the principal purpose for such a higher development price (manufacturing by 25.8%, electrical energy generation by 22.5%, mining by 6.1% and IIP by 22.4%). The higher indices for March 2021 have brought down the de-development prices for the complete year. Manufacturing for complete FY21 grows by (-) 9.8% and IIP by (-) 8.6%. This could be compared to second advance estimates for GDP to de-develop by 8% in FY21.
Indian steel sector is facing an exciting situation. First, the domestic flat category costs that elevated about 47% throughout the last six months are nevertheless at a discount of minimum 10% with worldwide costs. The existing HRC 2.5 mm structural grade is ruling at an typical cost of Rs 67,000/t ($905/t) ex-functions Mumbai (without the need of GST) and the spread involving HRC and CRC has widened to Rs 14,000/t against the standard premium of Rs 5,000-6,000/t. For rebar, when it is ruling at Mumbai at Rs 50,700/t ($685/t, without the need of GST), the rebar for Turkey is prevailing at $770/t.
Second, from mid-April to May, the main auto suppliers have announced production reduce down at their plants. During April ’21, sales of passenger vehicles had been expectedly reduce by 10% compared to March ’21 and more de-development in sales had been observed with regard to sales of two- and 3-wheelers. These plants and their OEMS are also supplying liquid healthcare oxygen in this crisis period. The customer tough segment is cutting down production of ACs and refrigerators as household expenditure is on hold to cope with sudden surge of Covid.
Third, the road sector has emerged as one of the focused sectors with the strategy by the government of constructing 4,600 km in FY22. These projects below PPP would be implemented by EPC or by HAM module which have got majority acceptance. Building roads at the price of 40 km per day has been aimed throughout the existing fiscal.
Fourth, Chinese export gives for steel in the adhere to up of withdrawal of export rebates have gone up. Export gives for HRC from China are at present quoted at CFR at $1100/t, a rise of about $one hundred/t in the last one month. This has also prompted Indian export gives to Vietnam also to go up to $1080-$1100/t. As a outcome, if there is a shortfall in demand in the domestic marketplace due to the serious influence of the Covid for a month or so, Indian steel players are probably to hold their production units operating by undertaking exports of HRC, CRC, galvanised and TMT by a larger volume.
Fifth, the growing trend in iron ore costs in the worldwide marketplace (Chinese CFR import of iron ore 62% Fe at present quoted at $224/t) has a corresponding rise in NMDC costs of Rs 6,560/t for fines Fe 64% and Rs 7,650/t for Fe 65.5% for lumps by NMDC in May 21.
(Views are individual)