The economics of steel are contributing to the overall economy woes of India.
India posted its second-highest monthly trade deficit ever of US $20 billion in January this fiscal year, adding pressure to an already groaning economy and its citizenry moaning under massive hikes in fuel and basic commodities prices.
The biggest trade gap of $21 billion was recorded in October 2012.
Oil and gold were the two big ticket items in the country’s import basket. The oil import bill was a staggering $15.9 billion in January, 6.9 percent higher than a year ago.
But what has all this got to do with steel, you may ask?
Steel imports are very close to taking the No. 3 spot on this list. India’s steel imports grew 17.5 percent in the first nine months of this year til January, something which Indian steelmakers have themselves been crying hoarse about.
According to a report in the Business Standard, raw material troubles in the domestic steel market led to the increase in steel imports, which are currently at 5.7 million metric tons for the first nine months of 2012-13. This comes along with a massive 62.3 percent decline in iron ore exports.
India, in fact, is technically the world’s third largest exporter of iron ore, but for the first time in recent years, was forced to import the raw material because of the legal ban on iron ore mining in some Indian states. Whatever little iron ore was being produced in India was being consumed in the domestic market, leaving no scope for exports.
The Federation of Indian Mineral Industries said India had imported 1 million tons of iron ore this year up until now, and the total import was expected to reach 2 million tons by the end of March.
Sohrab Darabshaw contributes an Indian perspective to MetalMiner.