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India's steel imports from China
Economy

India’s steel imports from China hurt local producers

01.12.2023
2 min read

India’s steel imports from China affect local suppliers

Following the lifting of strict measures to prevent COVID-19 outbreaks, China is actively promoting the development of the economy affected by the shutdown. Industry, where production volumes in some sectors have multiplied, is receiving particular attention. At the same time, local companies are looking for new ways to increase exports of their products by offering favourable terms to buyers. For example, steel imports from China have attracted the interest of Indian consumers, which could cause problems for local producers.
The sale of metal products from China at favourable discounts has had the effect of reducing the demand for steel from Indian companies. This situation is a major concern for local producers, who fear for their revenues well ahead of the seasonal increase in demand.
Chinese companies offer imports at a discount of USD 30-50 per tonne for hot and cold rolled steel. The discounts attract customers from India who are willing to sign contracts for large shipments. This, in turn, leads to a reduction in supplies from domestic producers who have strengthened the industry after the monsoon.
The automotive and construction industries are the largest consumers of steel products in India. These sectors generate demand for steel in the country and drive local production. However, according to Indian traders, importing Chinese steel is cheaper than transporting local products. Meanwhile, India’s five largest steel producers have said that low-cost products from China pose a threat to the local industry. Increased imports weaken the domestic market position of local suppliers. In addition, they are already suffering from China’s growing share of electrical steel.steel imports from ChinaStatistics for the first two months of FY 2023-2024:
– Indian consumers purchased 228,000 tonnes of steel from the PRC, the highest level in 6 years;
– around 35% of this volume was cold-rolled products, with complex products accounting for a slightly smaller share;
– Chinese stainless steel imports also reached a 3-year high of 170 thousand tonnes.

India’s trade policy

Local steel producers and trade organisations have asked the government to impose a countervailing duty on Chinese steel products. Such a move would have reduced risks for local companies and better regulated the cost of products on the local market. However, the authorities did not go for it, considering that such a decision could lead to higher consumer prices. Meanwhile, as of June 2023, India’s rolled steel exports fell by more than 21% to 502 thousand tonnes. The figure is the lowest since the end of 2022. The main reason for the reduction in supplies was a decline in European buyers’ demand and increased competition in Asia.

Tags: Economy
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