India faces tricky decision on steel imports

Indian steelmakers have ratcheted up calls for restrictions on imports from China and Vietnam to shield domestic industry from significant harm.

But the decision on whether to impose anti-dumping duties or other curbs is likely to be a challenging one for the government, industry sources said.

Major domestic mills have urged the government to limit flows from China, as elevated production levels and low local demand prompt the country's mills to keep exporting finished steel at prices significantly below those of domestic Indian material.

India became a net importer of finished steel in the April 2023-March 2024 fiscal year, with shipments from China rising by 91pc on the year to 2.7mn t. In April-June this year, China shipped 572,000t of finished steel to India, an increase of 40pc on the year, according to data from the steel ministry's joint plant committee.

The Argus fob China hot-rolled coil (HRC) index fell to a four-year low of $476/t at the end of July. HRC offers from China were last reported at $520/t cfr India, although trading firms said there was no buying interest yet at these levels.

"China is not competitive. They lose money at these prices. It's predatory pricing, which is detrimental to the future of the industry in India," said Tata Steel's chief executive, TV Narendran, during the company's earnings call.

JSW Steel and Jindal Power & Steel have also highlighted pressure from rising Chinese imports, as well as inflows from countries with which India has a free-trade agreement (FTA), such as Vietnam. Vietnam has been a main market for Chinese exports, and a dumping investigation could also be on the cards here.

After rising in April and May, domestic Indian HRC prices have been on a downward trajectory, largely because of import bookings. The Argus weekly Indian domestic HRC assessment for 2.5-4.0mm material was 50,800 rupees/t ($603/t) ex-Mumbai on 2 August, excluding goods and services tax, a fall of Rs2,950/t compared with the end of May.

No losses for steelmakers

While domestic steelmakers' profits have come under pressure, sources say they have not been running into losses yet.

JSW Steel's profit fell by 64pc on the year in the quarter ending 30 June, while Tata Steel's first-quarter profit after tax from its India operations declined by 33pc on the year.

"The government should not wait for steelmakers to run into losses. Some action must be taken before that happens," an executive at a major Indian steel mill said.

The Indian government last imposed anti-dumping duties on imported steel in 2017, with the threshold for the landed cost of HRC at $489/t. This netted back to $430-440/t fob, an industry source said, adding that Chinese prices still have not fallen to this level yet.

"If prices come precipitously close to the levels seen in 2016-17, there would be a definite problem," the source said.

While imposing restrictions on imports could benefit Indian mills, any increase in steel prices would also mean additional costs for the infrastructure sector, sources said.

The Vietnam question

Several sources suggested that restrictions on Vietnamese steel would have a larger impact on domestic prices than curbs on China.

Importers of Vietnamese steel do not incur additional duties on the landed price, unlike buyers of Chinese steel, because of India's FTA with ASEAN countries, including Vietnam.

There is also talk that Chinese steel is rerouted to India through Vietnam. Finished steel exports from Vietnam to India more than doubled on the year to 737,000t in the 2023-24 fiscal year.

Import bookings have increased since Vietnamese steelmaker Formosa Ha Tinh's export licence was renewed by the government's Bureau of Indian Standards (BIS) in May. Latest offers from Formosa were heard at $550/t cfr India.

By Amruta Khandekar