How cheap imports are hurting
not just domestic steel industries but also ship breakers
Dismantling business: Scrap steel from recycled ships is losing
market to cheaper imports
A key factor behind the reduced demand for local steel is the
dumping of cheaper steel into India by countries like China and Vietnam. The
surge in imports over the past few years, especially in 2023 and 2024, saw
domestic steel prices plummeting. In July, hot-rolled coil prices in India
averaged ₹52,267 per tonne, the lowest in over three years. The landed cost of
imported hot-rolled steel coils from China closely matched domestic production
costs, making imports more appealing to Indian manufacturers. Steel imports
increased by 15 per cent year-on-year in the first half of this year, while
domestic production dropped by 8 per cent.
Growing reliance on scrap steel imports from Western countries has further
weakened local steel demand. Post the pandemic, Indian re-rolling mills
increasingly turned to imported scrap for its competitive pricing and higher
quality, and the imported quantity increased 44 per cent year-on-year by
mid-2024.
The depreciation of the rupee has compounded challenges, making
raw material imports more expensive and squeezing the profit margins for
domestic producers. However, while the weaker rupee made steel imports
costlier, it was offset by the low base prices in countries like China, further
straining the local industry.
The current situation in both the steel and ship recycling industries in India is unprecedented. Historically, when ship recycling supply declined, steel demand often remained robust, balancing the market. However, for the first time, both supply of ships and demand for steel have declined simultaneously, creating a severe impact on the ship recycling industry in Alang and other hubs