Indian Steelmakers Urge Government to Curb Imports Amid Falling Prices and Low Capacity Use

Indian steel manufacturers are appealing to the government for enhanced measures to control a surge in imports from countries like China. This influx of foreign steel is directly affecting domestic prices, which have fallen to a five-year low in October, and leading to underutilization of production capacity, especially in the stainless steel sector where capacity utilization hovers around 60%.

Data from the World Steel Association reveals China's dominance, producing 746.3 million tonnes (MT) of crude steel in January-September, a stark contrast to India's 122.4 MT during the same period. In September alone, China produced 73.5 MT while India produced 13.6 MT.

To protect the domestic industry, the Ministry of Steel has issued over 100 Quality Control Orders (QCOs) to prevent non-compliant steel products from entering the market. Recent QCOs have also restricted imports of certain steel product inputs. Industry players suggest extending the validity of these QCOs and implementing further measures aligned with the Atmanirbhar initiative. The Directorate General of Trade Remedies (DGTR) had previously recommended a provisional safeguard duty of 12%.

The Reserve Bank of India (RBI) has also voiced concerns about the surge in steel imports driven by lower prices and called for policy support to bolster domestic steel production's competitiveness. India has been a net steel importer for six consecutive months, with inbound shipments exceeding exports.

A high-level committee from NITI Aayog is scheduled to meet with steel industry leaders next week to discuss the import issue.

Impact This situation directly impacts the profitability and growth prospects of Indian steel manufacturers. Reduced domestic demand due to imports could lead to lower sales volumes and price realization for companies, potentially affecting their stock valuations. Government intervention, such as duties or stricter QCOs, could provide relief and boost domestic production. Rating: 7/10

Difficult Terms: Crude Steel: The basic form of steel produced from iron ore in a steelmaking furnace. It's the raw material for most other steel products. Capacity Utilization: The extent to which a factory or plant's production capacity is being used. A lower percentage means the plant is producing less than it is capable of. Quality Control Orders (QCOs): Government regulations that mandate specific quality standards for products sold or imported into a country, ensuring consumer safety and product reliability. Atmanirbhar Initiative: A government program aimed at making India self-reliant in various sectors, encouraging domestic manufacturing and production. Directorate General of Trade Remedies (DGTR): A government agency that investigates trade malpractices like dumping and subsidization, and recommends measures like anti-dumping or safeguard duties to protect domestic industries. Safeguard Duty: A temporary tariff imposed on imports to protect domestic industries from a sudden surge of imports that causes or threatens to cause serious injury to the domestic industry. Net Steel Importer: A country that imports more steel than it exports over a specific period.