Steel shines bright

There is some more good news for the Indian steels sector and for a change, China is giving us this advantage.

Two days ago, the Chinese Govt removed the 13% VAT rebate on exports of 146 steel products from May 1st.

While discouraging exports, the Chinese also want to make it cheaper to import steel making raw material - it cut the import duty on pig iron, crude steel and recycled steel or ferrous scrap to zero, again from 1st May.

This comes at a time when China, in April reached the second-highest level in history, despite production cuts.

Why is China doing this? It wants to bring down the energy consumption of steel industry and it plans to do this by making exports unattractive and imports attractive, which in turn is aimed at bringing about a downward pressure on its domestic crude steel output. China produces more steel than it needs and the idea is that these measures will keep domestic steel in China itself and this in turn will cool down the Chinese steel sector.

This is a good move for Indian steel makers as it means that prices of steel and raw material will go up and are expected to remain high over the next two quarters at least. For all steel exporters from India, this increases the competitiveness and we will see the likes of SAIL, JSW Steel, Tata Steel, NMDC and Jindal Steel shining really bright this year.