Indian steel mills flag concerns over rising Chinese steel imports

Worried by the spike in Chinese steel imports into India, the leading body of steel producers in the country, the Indian Steel Association (ISA), plans to take up the matter with the government, seeking swift remedial measures.

Alok Sahay, secretary general of ISA, said that systemic changes need to be made in trade remedial measures. “In order to take any trade measure, it takes a minimum of 15 months, due to the prevalence of the lesser duty rule in India, making India an easy target. We are going to write to the government on this.”

“For a level playing field, trade distortions created by exporting countries have to be countered well in time and effectively,” Sahay added.

Data sourced from ISA show that imports of steel from China stood at 570,000 tonnes during April-July FY24, an increase of 63 per cent compared to the same period last year. Imports from Korea were at 685,000 tonnes, a 4 per cent dip year-on-year. The data are based on numbers from the Joint Plant Committee (JPC).

Domestic demand in China has been sluggish since the property market ran into trouble. However, production in China has increased, and strong demand in India is providing Chinese steel mills an opportunity to channel their products.

Jayant Acharya, joint managing director and chief executive officer of JSW Steel, said that while global steel production moderated, production in China had gone up by 2.5 per cent to 627 million tonnes during January-July 2023.

“The domestic demand in China remains muted, resulting in higher steel exports from China. Steel exports from China have risen 28 per cent to 51 million tonnes as a result.”

Acharya also said that many Chinese steel mills were operating below their cost of production to evacuate excess production. “India remains one of the few bright spots amid a weak global economic outlook, making it vulnerable to increased imports at unfair prices.”

According to steel majors, Chinese imports are impacting prices and gnawing at demand for Indian steel. Data from SteelMint showed that the average monthly price of hot rolled coil (HRC) ex-Mumbai was at Rs 59,938 per tonne in April and stood at Rs 55,500 per tonne in July. HRC is a benchmark for flat steel.

According to ICRA senior vice president Jayanta Roy, the increase in imports was on the back of a difference in price to the extent of 5-8 per cent in the earlier part of the first quarter of FY24 between landed cost of imports and domestic prices, coupled with weak demand in China.

Ranjan Dhar, chief marketing officer of ArcelorMittal Nippon Steel India (AM/NS India), said that Chinese steel mills were increasingly focusing on global export markets, which had led to a dual effect on the Indian steel industry.

“First, the Chinese mills are gaining a foothold in our traditional export markets, and second, they are pushing products into the Indian market at lower prices. In response to this situation, the government should promptly consider implementing quotas for countries with free trade agreements and imposing anti-dumping duties on imports from countries without such agreements,” he added.

Global demand for steel has also been muted, adding to the worries of Indian steelmakers. Overall exports of total finished steel from April to June were down by 6.4 per cent.

Sahay said that if there is no stable trade environment, it would impact investment in the sector.

Top Indian steel companies will be adding capacity, about 30 million tonnes between FY24 and FY26. Acharya pointed out that while major countries like the EU and the USA have safeguard trade measures, India is exposed with no effective trade measures in place. “It is time for the government to put in place safeguard mechanisms to ensure that Indian steel investments are not put to risk.”

ICRA’s Roy explained that when the anti-dumping duty was imposed in 2016, imports from China came down and the share of FTA countries (Korea and Japan) increased.

“But the anti-dumping duty was withdrawn in 2021 when the property market also tanked in China, which may have led to an increase in imports from China,” he said.

Industry concerns:

- Chinese production up by 2.5 per cent January-July

- Exports from China increase in the wake of slugging domestic demand

- Finished steel imports from China into India during April-July FY24 increase 63 per cent

- Industry claims, Chinese mills pushing products into Indian market at lower prices