India’s stainless steel production has registered a slowdown in growth in 2019, but worse is going to come.
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A report by the International Stainless Steel Forum (ISSF), the Brussels-based body of the World Steel Association, has forecast production will drop drastically in 2020 because of the COVID-19 pandemic, according to a statement by the Indian Stainless Steel Development Association (ISSDA).
According to ISSDA, India’s total stainless steel production grew by 5% last year compared with 2018 (compared to 7% growth in calendar year 2017). China’s production, meanwhile, grew by 10%.
India registered stainless steel melt production of 3.92 million metric tons in calendar year 2019. This may have been enough to help India continue to keep its second-place ranking — after China — on the list of largest stainless-steel-producing nations of the world for the third consecutive year.
But the coming slowdown now has stainless steel producers worried.
For the past few years, this sector had been registering growth figures of about 7%. For calendar year 2019, China’s production figure of 29.4 million metric tons accounted for over 50% of global stainless steel production.
“This slowdown in production, despite adequate capacity, can be attributed to a surge of almost 50% in imports of stainless steel flat products last year,” ISSDA President KK Pahuja said. In his view, India continued to remain “a bright spot” globally in terms of stainless steel consumption. With the combined efforts of ISSDA and the Indian stainless steel industry — and the Indian government’s timely support — stainless steel consumption was growing at a compound annual growth rate of 8-9% in the country, he claimed.
But according to the ISSDA, the rising demand was being “captured” by cheap imports. About 20-25% of the flat product market was relying on imports.
This situation has become even more worrisome because of the current pandemic, which has locked down manufacturing.
“There are trade sanctions in Europe and elsewhere to protect markets and the Indian Government must take prompt action to safeguard our interest and save livelihoods at this critical time,” Pahuja added.
Last year, imports of stainless steel flat products surged by almost 50%, ISSDA reported. This has been aided by unregulated dumping, as well as free trade agreements (FTAs) signed by India with Association of Southeast Asian Nations (ASEAN) countries, much to the detriment of the domestic industry, the Economic Times reported.
A few months ago, the Indian government proposed increasing the basic customs duty on imports of stainless steel finished products to 7.5% from 2.5% to help local players.
Though welcomed, the industry wanted an even higher level of protection in the form of increased basic customs duty on imports of stainless steel finished products of 12.5% (on par with carbon steel).
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Most of the imports are in stainless steel flat products, where the market share is as high as 20 (thus leading to the calls for protective measures).