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New Delhi - India's JSW Steel and Kalyani Steels are considering cutting some steel product prices to preserve market share, worried Chinese exports will become even cheaper due to a weaker yuan, company executives told Reuters.
India - the world's fourth-largest steel producer - turned net steel importer in the year to March 31 as an oversupplied China flooded it with cheap metal, mainly for construction.
China's decision this week to devalue its currency has further worried Indian steel companies, most of whom operate on razor-thin margins.
A senior official at JSW, India's third largest steel company, said it may keep prices unchanged for its high-end products, which make up 37% of its output, but that for the rest it may be difficult to hold to current rates.
RK Goyal, managing director of medium-sized producer Kalyani Steels, said it could scale down operations or further cut prices despite losing money.
"We will have to cut prices and bear losses," Goyal said. "It's very difficult to close steel plants entirely but we may have to shut some units."
India's steel imports jumped 72% in the fiscal year to end-March to 9.3 million tonnes, with China accounting for about a third of the total.
Over April-June - India's fiscal first quarter - steel imports from China rose 49% from a year ago to 723 000 tonnes, according to government data.
India-based Tata Steel, also Europe's second-largest steelmaker after ArcelorMittal, has said the country is importing 1 million tonnes of steel a month.
Spokesperson Chanakya Chaudhary declined to comment on Tata's pricing strategy but said there would be "mayhem" in the Indian market after the yuan devaluation.
The JSW official said although India's steel prices have fallen 20% in the past one year, consumers still prefer to buy China's even cheaper imports. The official declined to be named as he was sharing market-sensitive information.
India has already raised the import duty on some steel products to 12% but companies say that's not enough to protect the local industry.
Ravi Uppal, managing director of Jindal Steel And Power, said his company has cut prices by as much as 25% in the past one year and can't afford any more cuts.
"If the situation perpetuates, we will have no other option but to cut production ... We will continue to cut costs wherever we can, but the government has to protect us," Uppal said.
