Several of the biggest steelmakers in India are pushing to continue the minimum import price put in place by the government in February in hopes of reducing cheap imports while firming up steel prices in the domestic market.
According to a report from The Economic Times, the government-implemented measure from February is due to expire in early August, but major producers like JSW, Tata Steel and Steel Authority of India Ltd. (SAIL) wish it will continue, as it has helped them improve their bottom lines as the result of reducing steel imports in recent months.
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“MIP has benefited the domestic steel industry,” PK Singh, chairman of SAIL, told the Economic Times.
Not everyone in the steel industry has been in favor of so-called “MIP” as it has hindered end-user segments in the steel industry, mainly processing firms and equipment makers as it makes steel more expensive for these enterprises, the Economic Times reported.
“Without an uptick in infrastructure and construction activity, steel demand would remain sluggish, leading to weakening of steel prices,” one steel industry executive told the news source.
Steel Prices in 2017
While steel has had a strong 2016 in terms of prices, China’s slowdown in construction activity in the second half of the year could also lead to a reduction in steel prices. However, prices could uptick again in 2017, according to analysis from BMI Research, a Fitch Group:
“Over the first half of 2016, steel prices rallied due to a combination of high demand from Chinese steel users restocking the metal, government stimulus measures implemented in the housing market and positive investor sentiment. Although we forecast the January-June 2016 steel price rally to fade over the latter half, prices will gradually edge higher from 2017 onwards as the market shifts into a deficit.”
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