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India Becomes Net Steel Importer

India net steel importer amid Chinese surge.

Published

3 weeks ago

August 26, 2024

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India emerged as a net importer of steel during the April-July period of the current fiscal year, driven by a significant increase in shipments from China, according to a recent report. This shift marks a departure from India’s usual status as a net exporter of steel and underscores the changing dynamics in the global and domestic steel markets.

During the April-July period, India imported a substantial volume of steel, with Chinese shipments playing a dominant role. The surge in Chinese steel imports has been attributed to competitive pricing, which has made it more attractive for Indian buyers. This trend has raised concerns among domestic steel producers, who have been grappling with a slowdown in domestic demand and increasing competition from imports.

The rise in steel imports from China has affected India’s trade balance in the steel sector. Traditionally, India has been a net exporter of steel, leveraging its robust domestic production capabilities. However, the current scenario reflects a shift in market dynamics, where imports have outpaced exports, leading to India becoming a net importer.

The domestic steel industry is facing multiple challenges, including a slowdown in demand from key sectors such as construction and infrastructure, which has contributed to a buildup of inventories. At the same time, global factors, such as economic uncertainty and trade tensions, have impacted the overall demand for steel, influencing both production and trade patterns.

Chinese steel producers, benefiting from lower production costs and excess capacity, have been able to export large quantities of steel at competitive prices. This has allowed them to capture a significant share of the Indian market, putting pressure on domestic producers. The influx of Chinese steel has also raised concerns about the impact on domestic steel prices and profitability.

Industry experts have expressed concerns over the long-term implications of this trend, particularly for the domestic steel industry. The increase in imports could potentially lead to reduced capacity utilization and profitability for Indian steel manufacturers. There are also worries about the potential impact on employment in the steel sector, as well as the broader economic implications.

In response to the rising imports, domestic steel producers may seek government intervention in the form of protective measures, such as anti-dumping duties or import restrictions, to safeguard the industry. However, such measures would need to be carefully calibrated to avoid unintended consequences, such as price hikes for downstream industries that rely on steel as a key input.

The situation also highlights the importance of enhancing the competitiveness of the Indian steel industry. This could involve measures to reduce production costs, improve efficiency, and invest in new technologies. Additionally, boosting domestic demand through infrastructure development and other initiatives could help absorb the increased production and reduce reliance on imports.

The current trend of India being a net steel importer, driven by the surge in Chinese imports, underscores the need for a strategic approach to managing the steel sector. Balancing the interests of domestic producers with the need to maintain a competitive market will be crucial in ensuring the long-term health of the industry.

As India navigates this challenging period, the steel industry will need to adapt to the evolving market conditions. This may involve exploring new markets for exports, improving product quality, and enhancing cost competitiveness. The government’s role in supporting the industry through policy measures and infrastructure development will also be critical in shaping the future of India’s steel sector.

In conclusion, the rise in Chinese steel imports has led to India becoming a net steel importer during the April-July period, signaling a shift in market dynamics. This development presents both challenges and opportunities for the domestic steel industry, which will need to adapt to the changing landscape to maintain its competitiveness and contribute to India’s economic growth.

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Steel firms anticipate recycling mandate for automakers

The draft regulations specified 10% but the mandate is likely to be kept at 8 %.

Published

21 hours ago

September 17, 2024

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It is anticipated that the government will require automakers to recycle a certain percentage of steel from old vehicles. This measure is expected to enhance the steel circular economy and increase the availability of scrap steel. Based on the draft regulations concerning Extended Producer Responsibility (EPR) for end-of-life vehicles released on January 30, it is predicted that the Environment Ministry will introduce regulations mandating automakers to recycle or recover at least 8% of the steel used in vehicles from the fiscal year 2026, which was originally set at 10% in the draft. The requirement is expected to gradually rise to 18% by 2035-36, although the final mandate may be capped at 18% instead of the 30% proposed.

According to CRISIL, if automakers enhance their recycling efforts, an additional 0.2-0.25 million tonnes of steel scrap could become available. While this increase is modest compared to the total steel scrap consumption, it would still benefit the steel ecosystem and support the steel circular economy. Steel companies see the improved availability of scrap as beneficial as the sector works to reduce its carbon footprint. India, which imported 11.2 million tonnes of steel scrap in fiscal year 2024, lacks sufficient domestic scrap supply.

Tata Steel’s CEO and Managing Director, T. V. Narendran, noted that the mandate would help formalise the steel scrap market and positively impact efforts to lower carbon emissions, supporting sustainability. In steelmaking, scrap is used in electric arc and induction furnaces, while increasing scrap rates in carbon-intensive blast furnace processes could reduce emissions. As steel companies aim to decarbonise, scrap-based technologies are expected to play a key role.

AM/NS India’s Ranjan Dhar mentioned that even a slight improvement in scrap availability would be welcomed, especially given the anticipated global restrictions on seaborne trade as the industry shifts towards low-carbon steel production. Jayant Acharya of JSW Steel added that due to various countries’ protectionist measures, domestic scrap supply chains must be established swiftly to support India’s decarbonisation goals.

Dhar also highlighted that in India, vehicles have a longer life cycle compared to other countries, which means that to facilitate recycling, compelling incentives must be introduced to encourage the return of end-of-life vehicles. Additionally, steel companies are rapidly expanding capacity, with CRISIL MI&A estimating that large players will add around 50 million tonnes per annum by 2028, predominantly through blast furnace-based methods.

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India’s Steel Consumption to Grow 9-10% in FY25: ICRA

Steel sector capacity to hit 88% despite monsoon and rising imports.

Published

21 hours ago

September 17, 2024

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India’s domestic steel consumption is projected to rise by 9-10% in FY2025, according to a report by ICRA. The first quarter of FY2025 saw a 15% year-on-year growth in demand, although a slowdown is anticipated in the current quarter due to monsoon impacts. ICRA forecasts that steel sector capacity utilization will reach a decade-high of 88%, despite the addition of 15.6 million tonnes per annum (mtpa) of new capacity this year.

Between FY2021 and FY2024, India’s steel industry expanded rapidly, adding 26.3 mtpa of capacity. An additional 27.5 mtpa is expected between FY2025 and FY2027, driven by growing demand and increased imports. India’s finished steel imports rose by 35.4% in Q1 FY2025, continuing last year’s trend.

Despite rising imports, steelmakers are benefiting from lower raw material costs, with Australian coking coal prices down 45% and NMDC reducing iron ore prices by 18%. These reductions are expected to support profitability, though temporary margin contractions may occur in Q2 FY2025.