China’s Miffed That India Isn’t Importing Chinese Steel for its Rail Projects

by on

Source:: iStock

The seesaw battle between steelmakers in China and India took a new twist recently with a report in a Chinese newspaper calling the Indian government on its “protectionist” stance on steel.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

The state-run Global Times newspaper said in a report, referring to India’s decision to award its first bullet train project to Japan, that India needed to have a “sober” look vis-a-vis China when it came to solutions for India’s proposed railway network revamp or its entirely new high-speed rail project.

The high-speed “bullet train” project is likely to commence in 2018 on a 315-mile (508-kilometer) route between Mumbai and Ahmedabad. It’s slated to be completed by 2023.

India has been waging a war against cheap steel imports into the country for some time now, with Chinese steel companies high on their bad guy list. The government imposed taxes in various forms not to protect its own steel industry, but to equalize import prices to production costs. Over 80% of the funding for the project is coming from Japanese investments.

The Chinese news report, though, said that India needs China more than the other way around when it comes to steel rail manufacturing and train technology.

The Global Times report said countries and regions along the Silk Road would “benefit considerably” from China’s exports of its train technology which, to date, Indian buyers have admittedly enjoyed both in terms of pricing and quality of the finished rail, switch and hub projects. It thus advised that New Delhi take a “sober look” at its neighbor when it comes to solutions for India’s rail network revamp or the new high-speed rail project.

This tiff goes back several years. China initially made a bid for India’s high speed train corridor projects and, back home, Chinese companies have already built over 12,427 miles (20,000 km) of high-speed rail lines. That number is expected to go up to nearly 28,000 miles (45,000 km) by 2030.

The Chinese media report also criticized India for taking what it called a “protectionist stance” by slapping anti-dumping duties on Chinese steel products, despite the fact that India has A/D duties on several countries and the European Union’s steel imports in recent years.

The implication is that India is somehow done with Chinese steel and won’t use it in either project, but the reality is that it’s not as if India wants nothing to do with China, its steel, or even its expertise in rail construction. In the last two years, India has worked out cooperative agreements with China for the development of railways. Also, Indian Railway engineers are getting trained in China in heavy hauling.

Sure, while China may be making a case for its rail expertise, the pitch on the steel front has turned a tad more in favor of native Indian producers in recent years, but that’s really nothing new at this point. India turned into a net exporter of steel this year. A decline in Indian steel imports coincided with strong growth in steel exports by domestic mills, supported by an improvement in pricing in international markets, said Senior Vice President of ICRA, Jayanta Roy. This was all against a gap of 7.6 metric tons in fiscal 2016 between India’s steel imports and exports, so exports finally surpassed imports in India’s 2017 fiscal year.

While all of this was going on, just across the border China drastically reduced its own steel capacity, yet still reported an overall steel production increase. This looks, very much, like an attempt to find a place for excess stocked up raw steel products than anything that has to do with a business relationship to bring rail expertise or technology to India’s big projects in that light.

According to reports, China produced 808.4 million mt of steel in 2016. It produced 61.2 mmt of steel in February 2017, a growth of 4.6% year-over-year. The rise in February was China’s 12th straight monthly year-on-year rise in steel production. China has recently decided to cut 50 mmt of steel capacity, which was higher than the target of 45 mmt for 2016, but that won’t do much for existing stockpiles that are waiting for customers right now.

Two-Month Trial: Metal Buying Outlook

India is merely making its steel in India and China is merely trolling for large projects that require exports of bulk steel. None of that, of course, means India wouldn’t gladly work with its neighbor, bring in Chinese companies for their rail construction expertise and maybe even purchase some specific rail products that Chinese companies can provide if the price was right.

Comment (1)

  1. Denz says:

    Not only is it protectionism, which China also does, but also about quality. Chinese steel, like everything made in China is garbage.

Leave a Comment

Your email address will not be published. Required fields are marked *