Steel companies fear recession if metal fall continues

China’s biggest stock-market rout since 1992 sent metal prices crashing which in turn hit the already-ailing Indian steel industry hard. Steel companies have been asking for government intervention as cheap global imports flood markets. As trend suggests, global steel industry is running at a capacity utilisation of 70 percent, Indian at 90 percent and China at 100 percent capacity utilizations.

The government had addressed the acute problem of dumping by a marginal hike in import duty last month. There are talks of yet another duty hike in the face of metal meltdown. “Import duty hike will help save domestic steel players from cheap imports,” says Kalyani Steel Managing Director RK Goyal in an interview to CNBC-TV18. He said steel prices have corrected 20 percent this year despite a fall in global iron ore prices.   

Raising concerns over the continuous correction in steel prices, Ankit Miglani, Deputy Managing Director, Uttam Galva says until the global prices stop falling, there cannot be any respite.

With metal stocks under pressure, the industry is likely to face a tougher season in the coming couple of months, making the business environment more challenging and almost uncompetitive, he says.