Indian steel industry must conquer imports, boost exports, and seize global opportunities: Naveen Jindal

With Trump’s return to Presidency, we anticipate increased protectionist trade policies in the US, particularly targeting Chinese imports. This could compel China to rework its export strategy, especially in the steel sector, to avoid higher tariffs or trade restrictions. As a response, China might reduce its steel exports to the US, potentially redirecting surplus volumes to other regions, including India.

We also expect the Chinese companies to quickly add new capacities in the ASEAN region to leverage their FTAs and continue with exports, besides the increased level of engineering exports to India. The overall impact will depend on how the US-China trade dynamics evolve under the new administration, but we feel that this might have a severe impact on the Indian steel industry.

We expect the new regime to present opportunities for India through improved diplomatic channels. There is a possibility of reopening some trade lines for Indian steel, which have been restricted in the past.

The EU’s Carbon Border Adjustment Mechanism (CBAM) poses both a challenge and an opportunity. Indian steel producers are actively adopting low-emission technologies, but government support is crucial for this transition.

The CBAM, as a non-tariff barrier, must be addressed through diplomatic channels to ensure fair trade practices.

Europe remains vital for Indian steel exports, but ongoing anti-dumping investigations and sluggish recoveries in key economies like Germany are significant headwinds.

While Indian steel-makers comply with global trade norms, diversifying export markets is prudent. Emerging regions such as Africa, Southeast Asia, and the Middle East offer promising opportunities to mitigate risks associated with European market uncertainties

The sequential and year-on-year rise in steel exports during October is encouraging. However, its sustainability depends on the recovery of key global markets and the resolution of geopolitical uncertainties. While regions like Europe and Southeast Asia show potential for demand recovery, the current global economic environment remains volatile. This growth in exports appears to be a one-off, and caution is warranted.

India’s economic strength lies in its robust domestic market, driven by consumption. In FY24, our steel consumption grew by approximately 14 per cent, making our market highly attractive to global steel producers.

With India’s steel demand projected to grow at a CAGR of around 6 per cent, we remain a preferred destination for surplus steel from other countries, particularly those facing stagnant domestic demand. These surplus producers are increasingly dumping subsidized steel into India at predatory prices, which significantly pressures the margins of Indian steel manufacturers. If left unchecked, this trend could erode the profitability and competitiveness of domestic players.

We anticipate that the Indian government will take decisive action to safeguard the domestic industry through measures such as anti-dumping duties, safeguard tariffs, and possibly a Border Adjustment Tax. These measures can help counter the levies and duties borne by domestic steel manufacturers, ensuring a level playing field while meeting the growing domestic demand.

India’s steel industry is in expansion mode, with domestic capacities being developed for previously un-produced grades (new grades/types). While strong domestic demand validates the sector’s resilience, imports at predatory prices are a concern. Safeguarding our market from such imports is critical to maintaining the industry’s health and long-term growth. Given the rising pressures from imports, I am confident that the Modi government, with its commitment to Atmanirbhar Bharat, will introduce policy interventions soon to protect the domestic industry.

For Indian steel producers, the break-even price hovers around $400 per tonne. However, given current raw material costs, steel prices must remain near $600 per tonne to sustain investments in low-emission technologies and new expansions.

India’s steel sector is buoyed by strong domestic demand, driven by government infrastructure spending, which has increased to 3.4 per cent of GDP in 2024 - up 2.5 times the 2020 expenditure. With around Rs 12 lakh crore allocated to infrastructure in the latest Budget and approximately one-third of steel consumed in government projects, the sector’s outlook is positive.

Against this background, it can be visualized that the steel sector, by and large, would do well, and investments would also happen in tune with the Government’s short—and medium-term policy, provided the Centre takes measures to keep our market intact and support the creation of a market of low-emission steel.