Modi’s Make In India Future is Dependent on Chinese Steel Imports

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India’s steel consumption is expected to grow at its fastest pace in five years next year on Prime Minister Narendra Modi’s infrastructure push, but a scarcity of raw materials means it will be at the expense of another of his key goals – curbing imports.

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In his triumphant election campaign, Modi criticized the last government for exporting iron ore but importing steel. But his first five months as the prime minister has coincided with a surge in imports of both, denting his high-decibel drive to make India an export powerhouse.

India’s steel imports from China, the world’s biggest producer of the alloy, doubled in April-September from a year ago though the country has enough capacity to meet its demand. While India’s consumption is expected to rise, China will continue to see a downtrend, likely leading to a flood of cheap steel from China just as Modi pushes ahead with a signature ‘Make in India’ initiative to boost industry.

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Chinese steel prices closed flat for the day. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($136.77) and a low price of CNY 830.00 ($135.14) per dry metric ton. Chinese HRC held its value last Friday at CNY 2,970 ($483.57) per metric ton. The price of Chinese coking coal saw little movement at CNY 1,390 ($226.32) per metric ton.

The steel billet cash price saw essentially no change on the LME for the fifth day in a row, remaining around $465.00 per metric ton. For the fifth consecutive day, the steel billet 3-month price held flat on the LME at $455.00 per metric ton.

The 3-month price of the US HRC futures contract saw little price change last Friday at $630.00 per short ton. The US HRC futures contract spot price flattened at $632.00 following two-days of declines.

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