Removal of export rebates in China positive for steel prices: JPMorgan India

“Therefore, China is telegraphing to the industry that we want to export less steel, so export rebate removal was positive. And over the next three to four months, as Chinese demand recovers and steel production falls lower, there is an expectation of some kind of formal export tax coming in on the main steel products that China exports,” he said.

On cartelisation by steel producers, Parekh said, “We will not comment on what the judicial (The Madras High Court) process is or what the regulatory agencies do. What we would highlight is that steel in India is priced on an import parity basis, you are free to import steel, and you can work on a landed basis and the domestic steel companies generally price steel at a slight discount to import parity prices; the government adjusts the import duty and to that extent, the domestic steel prices take place. So I don't think that there is any collusion.”

“This is a free market; a consumer can import steel if the domestic prices are high. The problem is that the world has worked on China exporting a large amount of steel over the last 10 years and that clearly is not the situation, going forward. So, it is just that higher prices could possibly be here to stay,” said Parekh.

For the entire interview, watch the video