New Delhi Indian authorities need to take “various measures” for controlling rising steel imports from China, and other indirect sources (Chinese-export-induced countries) like Vietnam, Ranjan Dhar, Director and Vice-President – Sales and Marketing, ArcelorMittal Nippon Steel India (AMNS India), said.
Dhar is also in favour of restoring basic customs duty (BCD) on imports of the metal to 12.5 per cent, at least 500 percentage points up from the existing 7.5 per cent.
There is a rising clamour amongst domestic steel makers over growing Chinese and Vietnamese imports.
India is already a net importer of steel for FY24 and two months into FY25, with exports continuing to be depressed in the face of rising Chinese imports (up 79 per cent in April and May of this year).
“The world is not consuming more steel. The Chinese demand is not good. And the excess stocks there is causing an oversupply globally, not just in India. Wherever Chinese steel can go, it is going at low prices, sometimes even lower than the cost of production,” he told businessline on the sidelines of an event organised by PHD Chamber of Commerce and Industry.
“India has to be mindful that this import cannot continue at these (low) prices,” Dhar added.
India, apart from Vietnam, continues to face the major brunt of such cheap Chinese shipments.
In 2022, China exported 65-68 million tonnes (mt) and in 2023, despite depressed domestic demand, it exported 85 mt (apprx). In 2024, exports are expected to be in 110 mt range, if not more, at the current run-rate.
“Imports (in India) are coming at a low price, probably lower than cost of production especially from China, or indirectly through Chinese-export-induced countries like Vietnam....Trade measures, investigations, all that can start. But immediately, we should go back to the 12.5 per cent duty regime (BCD). This was brought down to 7.5 per cent when steel prices were high. Now that the situation has reversed,” Dhar said.
Lower price of imports
The price differential between domestic trade-level hot rolled coils (HRCs) versus landed imported are quite stark.
For instance, the domestic trade-level HRC, ex-Mumbai, averaged around ₹53,533 per tonne over the last few months whereas the landed price of material imported from FTA countries was at ₹51,100/tonne. In comparison, shipments coming in from China were priced at ₹48,900/tonne, as per market intelligence firm, BigMint.
In May, the landed price from FTA countries was at ₹51,500/tonne whereas domestic prices were at ₹54,100, a difference of around ₹2,600/tonne. Chinese prices were still hovering at the ₹50,000/tonne range.
Despite, Chinese real estate demand continuing to be depressed, there is no significant production cut there, as of yet.
In fact, a survey by global market intelligence firm, MySteel, shows that production among Chinese blast furnace steel-makers continues to rise (with more steel mills bringing back on-stream their idled furnaces).
During June 14-20, the average BF capacity utilisation rates of the 247 steelmakers rose and was at a seven-month high of 89.76 per cent.
Safety of Investments
According to him, Indian steel industry is already putting in substantial investments, which include capex towards capacity ramp-up, keeping in mind the rising domestic demand and government spending on infra. So, some policy support towards ensuring security of such investments and profitability of the sector needs to be considered.
“This capex has a lifecycle of being repaid. So, if the profitability of the industry drops, it will be a stressful situation in the country,” Dhar said.