Steel imports climb over 50% in April, exports fall
India’s steel imports jumped 51.6 per cent to 0.76 million tonnes (MT) last month compared with the year-ago period, government data showed.
However, on a sequential basis, the imports declined 9.4 per cent from March this year, the Joint Plant Committee (JPC), a unit of the Steel Ministry, said in a report.
“Import of total finished steel, at 0.761 MT in April 2015, saw a growth of 51.6 per cent over April 2014 and decline by 9.4 per cent over March 2015,” the report said.
“Domestic steel industry is going through tough times, mainly due to a decline in demand in China, the world’s largest steel producer. Importing steel from China was cheaper than producing it here and this led to imports, especially in the second half of 2014,” a steel company executive reasoned.
But since the first quarter (January-March), imports have been in decline, an assuring sign for the domestic steel industry, he added.
According to JPC data, steel imports grew 71 per cent to 9.321 MT in 2014-15, with India remaining a net importer in the previous fiscal.
Imports in March 2015 rose 91.8 per cent to 0.84 MT, but down 14.8 per cent compared with February 2015, the data showed.
According to JPC, India’s consumption of total finished steel registered an annual growth of 7.1 per cent in April at 5.5 MT, but declined 23.2 per cent over March 2015.
Steel exports in April, at 0.38 MT, slumped 15.2 per cent year-on-year. Quarter-on-quarter, too, exports came down 24.9 per cent.
In April, crude steel production stood at 7.392 MT, up 1.5 per cent year-on-year. But compared with March, the overall production turned lower by 4.1 per cent last month.
Cement demand likely to grow by 7% during FY16: ICRA
Riding high on the improvement in infrastructure, investment cycle and overall economy, the demand for cement is likely to grow by nearly 6.5—7 per cent during FY16, rating agency ICRA said.
Cement demand is likely to improve gradually in the medium term in line with the recovery in infrastructure, investment cycle and overall economy, it said.
ICRA expects demand to grow by 6.5—7 per cent during FY16 and the pace of recovery in cement industry is likely to mirror the trends in economic recovery.
The cement capacity utilisation is likely to remain moderate at 72 per cent given the capacity overhang, but it is likely to improve to 77 per cent in FY17 driven by both pick—up in demand as well as slowdown in new capacity addition, it said.
All India cement production grew by 5.6 per cent in FY15 as compared to 3 per cent in FY14.
While pre—election spending and delayed monsoon had supported the growth in cement demand in the first half of FY15, the growth slowed down in H2 FY15 once the election cycle was over, ICRA senior vice—president Sabyasachi Majumdar said.
“Cement demand was also impacted by cut down in government spending during January—March 2015 quarter, muted demand from real estate and construction projects and slow recovery in infrastructure spending,” he said.
Further, decline in kharif crops production owing to poor monsoons affected agricultural incomes and post—monsoon rural demand for cement for housing and other purposes, he said, adding that “regional factors such as extension of monsoon in south, extremely cold weather and unseasonal rains in north in Q4 FY15 also affected construction activities and consequently cement demand in some areas.”
According to ICRA, the profitability margins of most cement companies contracted on a quarter—on—quarter basis post monsoons due to pressure on realisations. As per ICRA estimates, the operating margins declined from 15.4 per cent in Q2 FY15 to 14.1 per cent in Q3 FY15.
“The profitability and debt protection metrics are likely to improve in FY16 but will continue to remain subdued.
Pick—up in infrastructure projects and overall investment cycle as well as improved pricing power are likely to remain the key triggers for the sector over the near—term,” he said.
Shipping industry seen facing major dilemma on ballast water management
The Round Table (RT) of International Shipping Organisations (comprising BIMCO, the International Chamber of Shipping, Intercargo and INTERTANKO) is deeply concerned of the international convention to regulate ships’ ballast water coming into force in the near future without a realistic implementation schedule that recognises the timetable for US type-approved Ballast Water Management Systems (BWMS) to be available in sufficient quantities.
The RT believes that the resulting dilemma would force the international shipping industry to spend millions of dollars on BWMS that may not achieve US type-approval and, therefore, will need to be replaced in a short period of time.
The RT emphasises that it supports the need for international requirements to protect local ecosystems from the impact of invasive species carried in ships’ ballast water. The RT also firmly believes that shipping is a global industry requiring global regulation.
The Ballast Water Management Convention is developed by the International Maritime Organization (IMO) and is, therefore, the best instrument to achieve this objective. The RT expects the Convention to be ratified very shortly and enter into force as early as 2016. Shipowners that have not already done so will be required to spend between $1 million and $5 million to install a BWMS on each of their ships in accordance with the schedule established in Assembly Resolution A.1088 (28). It is estimated that there are 50,000 ships that require to be fitted with BWMS over a 5 year period.
However, this may also create an impossible situation for ships that trade to the US, where unilateral national regulation is already in force. The US regulations ultimately require all ships that discharge ballast into US waters (12 miles) to treat this through a US Coast Guard (USCG) approved BWMS. Currently, there are a number of BWMS in the USCG testing and approval process, but none that have as yet received type approval. The RT has urged the US Coast Guard to approve as many ballast water management systems as possible, as soon as possible and provide a pragmatic schedule for the installation of such equipment. Further meetings between the RT and senior leaders of the US Environmental Protection Agency (EPA) re-emphasised these points.
There are 54 BWMS approved under the IMO regime, but worryingly only 17 manufacturers have indicated intent to submit their system for USCG approval testing. There is no guarantee that systems submitted will gain approval under the stringent US testing regime; consequentially, when the IMO convention enters into force, ship operators trading to the US will be forced to fit a BWMS that may never achieve USCG type approval. If the chosen system does not obtain USCG approval, it will have to be replaced within 5 years in order to continue to trade to the US. A shipowner, who in good faith wants to comply with international and national ballast water management requirements, therefore faces an unacceptable position of having to possibly invest twice in a BWMS through no fault of his or her own.
Similarly, IMO member states have been strongly urged to take this potentially very costly issue into account when deliberating ballast water management issues at the upcoming 68th session of the IMO Marine Environment Protection Committee. The safest way to avoid it is to ensure that there are sufficient USCG approved BWMS available on the market before the IMO Convention enters into force. This also implies that national BWMS manufacturers should be encouraged to apply for US approval; the low rate of application raises serious concerns over confidence in the operational capability of equipment that is already being sold, stressed a release.
This post was written by Atlantic Admin