Chinese Exports Are Harming India’s Steel Industry, Too

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Naturally, when market demand domestically has slowed down to an unprecedented level, China has resorted to what any country does under similar circumstances – it has started exporting its steel.

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China’s level of export has even begun to affect steel prices in the US. That’s also India’s problem at the moment. One estimate claims between April and August this year, Indian steel imports rose 23% on a year-on-year basis, much of it from China. For example, China is quite bullish on its exports of steel reinforcement bar into India.

Steel Authority of India Ltd. (SAIL) Chairman Chandra Shekhar Verma went on record recently expressing concerning over Chinese imports. There is a serious mismatch emerging between China’s steelmaking capacity, the year-on-year rise in is steel production and its domestic demand, and Indian producers are naturally worried that all of it would lead to the dumping of cheap Chinese steel in the Indian market.

Another Indian steel major JSW Steel has already declared a decline of 6% in steel exports. Essar, too, said its export rate was down though it did not give a figure. All of it is being blamed on China’s increase in steel production.

Experts are now advising Indian steel companies to refocus their strategy. In this article in The Hindu BusinessLine, Nicholas Sowar, Global Steel Leader, Deloitte LLP, was quoted advising Indian steel companies to focus on adding capacity of value-added steel for specific end-user markets because crude steel is facing oversupply pressure.

In 2013, according to Deloitte, there was an excess capacity of 517 million tons (mt) globally for crude steel, much of it because of China’s accelerated capacity addition. Thus, analysts like Nicholas feel that Indian steel makers need to find the selective niches for value-added products. The Koreans and Japanese, whose steelmakers work closely with automobile manufacturers for example, have just such a niche market.

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