- Cheap Chinese steel
imports are flooding the Indian market, hurting domestic producers and
decreasing exports.
- Indian steelmakers
are calling for government intervention to curb imports and protect the
domestic industry.
- Moody's predicts
India could outpace China in steel production, but challenges remain due
to global oversupply and falling prices.
Via Metal Miner
With a new government in place following the recent general
elections, Indian steel manufacturing firms are again clamoring for the
imposition of more import duties and other measures to curb cheap steel imports
from China.
India ended up being a net importer of steel during the
April-March 2024 period. According to provisional government data, this trend
persisted, with finished steel imports reaching a five-year high in April and
May. Following the renewed demands for import curbs, rumors
say that Indian steel and trade ministries are already in talks to resolve the
vexing issue.
Steel
Manufacturing Firms React to Cheep Chinese Imports
The cheap imports flooding Indian markets, alongside China’s
similar tactic of flooding European and African markets with cheap steel, has
started to impact Indian steel exports negatively. This is in addition to the
moves garnering criticism from countries like Turkey and
Indonesia.
According to this report, because of
pressure on steel prices, the price of China-made hot-rolled coil dropped to
U.S. $520 per ton from $525 per ton within a week. Compare that to export
prices of Indian steel, which ranged between $650-$660 per ton, and it’s not
difficult to see the problem. India’s steel exports in May 2024 totaled 0.5 MT.
According to provisional data from BigMint, a market research and consultancy
firm, this marks a nearly 25% decline from the approximately 0.66 MT exported
in April.
India’s Steel
Industry Faces Crisis as Cheap Chinese Imports Flood Market
While export matters are of concern, what is even more distressing
for Indian steel manufacturing companies is the flooding of the domestic market
with Chinese steel. According to Ranjan Dhar, Director and Vice-President of
Sales and Marketing at ArcelorMittal Nippon Steel India, Indian authorities
need to implement “various measures” to control the rising steel imports from
China and other indirect sources such as Vietnam.
According to Dhar, global steel consumption was down. At the same
time, demand for Chinese steel within China was also down because of economic
concerns and the real estate crisis. Therefore, the excess stocks had created a
global oversupply. According to him, Chinese steel companies were, at times,
selling steel at prices even lower than production costs. Get crucial updates
on steel prices and steel industry news delivered straight to your inbox with MetalMiner’s weekly newsletter.
Chinese
Exports Continue to Increase
In 2022, China exported 65-68 MT of steel. However, it exported
approximately 85 MT in 2023 despite depressed domestic demand.
A report by the Indian steel ministry said the value of Chinese
steel exports to India in April 2024 was U.S. $434.01 million as compared to
$391.67 million in March. During these two months, India imported 1.1 million
metric tons of finished steel, an increase of 19.8% compared to the same period
the previous year.
Meanwhile, weak global demand and declining input costs continue
to pressure steel prices. As a result, Indian steel manufacturing companies are
prioritizing domestic demand, particularly as exports continue to be a less
profitable option. While competitive pricing in West Asia and Southeast Asia
poses challenges, the situation in Europe continues to worsen due to weak
demand and stringent regulatory conditions. For his part, Dhar also advocates
for restoring the basic customs duty (BCD) on steel imports to 12.5%, a
significant increase from the current 7.5%.
Is India on
Track to Outpace China?
A recent report by Moody’s suggests that India’s northward
climbing clamor for steel and the coming expansion in steel making by private
firms could place it above China in the ongoing steel war. The rating agency
recently conducted a comprehensive analysis, comparing both countries in terms
of demand prospects, market dynamics, and resource advantages.
According to the report, India’s
steel demand is expected to grow by 5-7% over the next 12-18 months. This
growth remains driven by robust economic and population growth, rapid
industrialization and urbanization, and supportive government policies. In
contrast, it projects that China’s steel demand will decline slightly due to a
sluggish property market and slower economic growth.