Rising yuan could hurt Indian steel industry

Rising yuan could hurt Indian steel industry. The Indian Steel Ministry has warned that the appreciating yuan in the neighbouring China could spell serious trouble for the Indian steel industry as its anticipated depletion in exports could trigger a rise in domestic prices of finished steel. Also, the appreciating yuan would make its imports cheaper, implying that Chinese buyers would be willing to lap up more iron ore from India than before. “We in the ministry are concerned that with yuan appreciation the exports of steel from China to international markets may become expensive, which may in turn jack up the prices of finished steel in India, although this would improve the depleted margins of the local steel manufacturers,” steel secretary Atul Chaturvedi told The Indian Express. He argued that with China withdrawing its export incentives to propel domestic demand, lots of small utilities dotting the entire country would be constrained to shut down their operations. “Production correction may begin in China and to that extent a certain quantity of Chinese steel would disappear from India, but what we are concerned with is that this in turn could hike prices of finished steel in India,” he reasoned. Another adverse fallout of yuan appreciation would be that imports would become cheaper in China and then Chinese iron ore buyers would lap up more iron ore from India, he said.