Chinese Exports, Steel Prices Trigger Crisis for Indian Producers

steel prices china and india

India may be the world’s second-largest steel producer, yet it continues to grapple with reliance on steel imports. In the last few months, China has emerged as a major steel exporter to India, leading to protests from India’s domestic sector. Indeed, India’s June 2023 steel imports rose by 5.9% month-on-month and 7.6% year-on-year. Alongside China, the country also saw increased shares from Vietnam. The primary concern among local steelmakers is protecting their interests while avoiding negative impacts on local steel prices.

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Impact of Chinese Steel Exports on India and Steel Prices

The fresh influx of low-priced steel from China, Japan, Vietnam, and Russia has exerted tremendous strain on Indian steelmakers. In June 2022, China’s share of steel exports was 26.1% of India’s steel imports, while Vietnam’s share was 1%. However, by June 2023, the import share from China increased to 37.1%, while Vietnam’s contribution rose to 4.8%.

This imported steel often sells at substantially lower prices than its Indian counterparts. This creates formidable challenges for Indian producers attempting to remain competitive. Consequently, many Indian steel mills felt compelled to shut down or reduce operations, leading to a substantial loss of jobs in the industry.

Steel Imports

The surge in Chinese steel imports also has implications for the Indian government’s revenue. Indeed, the government levies significant taxes on steel imports, and the increased inflow of Chinese steel directly reduces tax collection.

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Indian Steelmakers Call for Import Cess

In response to the adverse impact of Chinese steel exports, Indian steel producers recently began urging the government to impose an import cess on steel. An import cess essentially functions as a tax on imported goods. The rationale behind this appeal is to level the playing field and shield the Indian steel industry from unfair competition.

INDIA Waving flag  at Vidhana soudha

However, for now, the Government of India seems hesitant to implement such a policy. According to reports, the government’s primary concern is that an import cess might lead to higher steel costs for Indian consumers.

That said, the Indian government continues to weigh the advantages and disadvantages of imposing an import cess. Analysts expect a decision in the near future as the country seeks to strike a balance between consumer interests and safeguarding the domestic steel sector.

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ArcelorMittal’s India Plans

Meanwhile, prominent global steel company ArcelorMittal has ambitious plans to expand its steel production capacity in India. The company currently has a capacity of 6.6 million tons per annum (MTPA) in India. However, leaders aim to increase it to 8.6 MTPA by the end of 2024.  According to the Hindu BusinessLine, to achieve this, ArcelorMittal will invest US $1 billion in a bottlenecking project slated for completion by the end of 2023. This project will enable the company to enhance its production of flat steel products, including hot rolled coil and cold rolled coil. 


Additionally, ArcelorMittal plans to invest in a new automotive downstream facility in India. This would hopefully facilitate the production of high-quality steel for the automotive industry. The company has formulated a comprehensive plan to bolster capacities in Hazira, Gujarat to 15 MTPA by the first half of 2026.

Steel experts believe the decision to boost steel production capacity in India signifies ArcelorMittal’s confidence in the Indian market. Indeed, ArcelorMittal’s investment will likely play a crucial role in meeting the escalating demand for steel in the country, leading to job creation and contributing to economic growth. This could not only help reduce steel prices in the country, but further strengthen the nation’s position as a major steel producer.

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