Indian Steel Industry Urges Government Action Amidst Surge in Imports from China

Indian steel makers are grappling with an escalating challenge posed by a substantial increase in steel imports, with China being a primary source. Data reveals that China produced a staggering 746.3 million tonnes (MT) of crude steel from January to September, a figure more than six times India's domestic output of 122.4 MT during the same period. In September alone, China's crude steel production (73.5 MT) was over five times higher than India's production of 13.6 MT.

This import surge is severely impacting the domestic industry. Stainless steel production, for instance, is operating at only around 60 per cent of its 7.5 million tonnes installed capacity due to import competition. Consequently, domestic steel prices slumped to a five-year low in October. India has also been a net steel importer for six consecutive months, with inbound shipments exceeding exports.

The industry is appealing to the government for enhanced protection. They suggest extending the validity of Quality Control Orders (QCOs) to prevent sub-standard and cheap imported materials from entering the market. This is seen as crucial for the competitiveness of both the steel and stainless steel sectors, which require significant investment to meet future demand and align with the government's 'Atmanirbhar Bharat' (Self-reliant India) initiative.

Measures like the over 100 QCOs already implemented by the Ministry of Steel and the Directorate General of Trade Remedies' (DGTR) recommendation for a 12 per cent safeguard duty on certain steel products in March indicate the government's awareness. The stainless steel industry has also sought specific investigations into their imports. A high-level committee at NITI Aayog is scheduled to discuss the import issue with industry leaders next week.

Furthermore, the Reserve Bank of India (RBI) has voiced concerns, highlighting the rise in steel imports driven by lower global prices and advocating for policy support to bolster domestic steel production.

Impact: This news has a significant impact on the Indian stock market, particularly affecting the profitability and stock valuations of domestic steel and stainless steel companies. Increased imports can lead to lower revenue, reduced margins, and potential production cutbacks. Government intervention through QCOs, duties, or other protective measures could mitigate these impacts and improve the outlook for the sector. The overall competitiveness of India's manufacturing sector, especially in steel, is at stake. Rating: 7/10

Difficult Terms: Crude Steel: The basic form of steel produced directly from iron ore and scrap, which is then processed into various steel products. Capacity Utilization: The measure of how much of a manufacturing facility's potential output is actually being produced. Low capacity utilization indicates underused resources. Quality Control Orders (QCOs): Government regulations that mandate products to meet specific quality standards, often set by the Bureau of Indian Standards (BIS), before they can be sold in the market. BIS compliant: Meeting the standards and specifications set by the Bureau of Indian Standards, India's national standards body. Directorate General of Trade Remedies (DGTR): A department within India's Ministry of Commerce and Industry responsible for investigating trade malpractices like dumping and recommending remedies. Safeguard Duty: A temporary tariff imposed on imported goods that are increasing in volume and causing or threatening serious injury to the domestic industry producing like or directly competitive products. Atmanirbhar Bharat: A Hindi term translating to 'Self-reliant India,' a national initiative aimed at boosting domestic production, consumption, and exports across various sectors. NITI Aayog: The National Institution for Transforming India, a government think tank that replaced the Planning Commission and advises the government on policy matters. Net Steel Importer: A country that imports more steel than it exports over a specific period.