Steel tycoon Lakshmi Mittal’s dream of re-entering the Indian steel market is about to come true.

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After almost a year of legal tussles, the National Company Law Tribunal (NCLT), Ahmedabad bench, gave the green light to ArcelorMittal’s resolution plan for the debt-laden Essar Steel Ltd. The latter was put on the block after lenders asked the court to recover about U.S. $7 billion in dues.

The approximately U.S. $5.9 billion acquisition of the distressed plant, though, has run into one more road block.

Essar Steel Ltd’s ex-promoter Prashant Ruia and two other directors of the erstwhile board of the steelmaker have approached the National Company Law Appellate Tribunal (NCLAT) to thwart the move.

Standard Chartered Bank, a dissenting bank among the Committee of Creditors (CoC) of Essar Steel, has challenged the NCLT’s order.

The bank’s contention was the resolution plan approved by the CoC of Essar Steel favored the secured creditors.

In late January, the same Tribunal had rejected a full debt settlement proposal by shareholders of Essar Steel, ruling that the offer violated Section 12A of the Insolvency and Bankruptcy Code (IBC), which says the promoters can reclaim a company from bankruptcy by paying full settlement, but not after others have submitted their expressions of interest.

This is one more hurdle that Mittal will now have to overcome to take over the mill, which boasts an annual capacity of 10 million metric tons.

A joint venture between Japan’s Nippon Steel & Sumitomo Metal Corp. with ArcelorMittal has offered an upfront cash settlement of about U.S. $ 1 billion and a multimillion-dollar capital infusion as part of the acquisition process.

ArcelorMittal SA is the world’s largest steel company by volume but doesn’t have a steel plant yet in India. Once the formal acquisition is done, Essar Steel’s capacity will immediately make ArcelorMittal the fourth-biggest player in India. The Essar plant is operating at much lower capacity; experts say will need a large influx of funds to run at capacity.

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ArcelorMittal has a presence in 60 countries and an industrial footprint in 18 countries. Mittal has made several attempts in the past to get into the Indian market, but none bore fruit.

In 2010, the company signed an agreement with the Karnataka provincial government to set up a 6 million ton per annum capacity plant, but the land acquisition process itself has taken about eight years.

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In what’s been dubbed as a rather unique agreement for an Indian steel company, JSW Steel this week signed a payment and supply deal with Duferco International Trading Holding (DITH) for U.S. $700 million.

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According to reports, the five-year agreement provides DITH with supplies of various steel products over the agreement term. For JSW, on the other hand, it confirms a steady flow of funds for its growth plans.

JSW Steel, one of India’s largest steelmakers, recently received a letter of intent in the auction of the insolvent Bhushan Power & Steel Ltd., taking it one step closer to acquisition of Bhushan. Also, late last year JSW Steel announced a multimillion-dollar plan to strengthen its downstream manufacturing capacity.

The new arrangement with DITH entails a financing structure that will provide JSW long-term funding to complement its plans for future growth, secured by committed exports of steel products to DITH, the company said in a statement.

This is not the first time that JSW and DITH have entered into a deal; there have been smaller agreements in the past 15 years. The deal, according to reports, was “the largest trade finance facility” to have been arranged in the Indian steel sector.

According to the company, the deal has been arranged and financed by a number of global banks:  BNP Paribas, Citibank, Credit Suisse, ING, Mashreqbank, Natixis, Societe Generale, with Standard Chartered Bank acting as mandated lead arrangers and bookrunners.

JSW Steel is the flagship company of the U.S. $13 billion JSW Group. The company has about 50,000 customers in 108 countries, and a recorded turnover of U.S. $7 billion, with sales of 12 million tons per annum.

Going by JSW’s plans, Moody’s Investors Service recently revised the outlook on JSW Steel to positive from stable, citing an improved credit situation.

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Moody’s also affirmed JSW Steel’s Ba2 corporate family rating (CFR) and the Ba2 rating on the company’s senior unsecured notes.

The railways sector is one of the high-growth areas in India, so far as infrastructure is concerned.

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Much of it still runs on a setup that its former colonial ruler, the British Empire, left behind, and then some.

In a bid for modernization, which includes a bullet train, India wants steel for new and replacement rail tracks, wagon wheels and so on.

There are billions of dollars worth of contracts to be given out, but there’s a problem.

There are barely two domestic companies who can provide what the Indian Railways (IR) wants.

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Last week, MetalMiner reported on the challenges India’s steel companies face in the form of cheaper imports, and their desire for the Indian government to impose an import tax.

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The woes of India’s aluminum producers, too, are similar.

Primary and secondary producers have started grumbling about cheaper imports eating into their aluminum business.

The ongoing trade war between the U.S. and China has seen the dumping of aluminum finished products in India, not only from China but also from nations with whom India has a free trade agreement, including Vietnam, Malaysia and Japan.

Anil Agarwal, of the Aluminium Secondary Manufacturers Association, was quoted by the Business Standard newspaper recently as saying that the import of finished aluminum products into India had eroded the margins of medium and small players by as much as 7%.

According to estimates, such imports have gone up by over 50% year on year, which has put the small and medium-sized enterprises (SMEs) businesses in peril. Total aluminum imports have grown 21% year over year.

Between April and October 2018, aluminum imports into India increased 24% year over year. In addition, low prices and rising production costs have also made life difficult for the domestic aluminum industry. Production costs, for example, have gone up as much as 30% over the past approximately four years.

Primary and secondary aluminum producers, like their steel counterparts, have been asking the Indian government to hike the import duty on primary aluminum to 10% from the current 7.5%, according to the Business Standard.

India’s domestic aluminum industry has about 3,500 MSME players, the Business Standard notes, while there are three large primary producers —Hindalco Industries, Vedanta and the state-owned National Aluminium Company (Nalco).

Scrap aluminum imports, too, have gone up dramatically.

But imports of aluminum scrap carry a 2.5% import duty, even though imports have gone up by about 27%, by the industry’s reckoning.

Indian producers lament they cannot compete with countries like China. The latter is able to produce aluminum at a cheaper rate because it follows the Shanghai Metal Exchange for price, which is U.S. $250-300 per ton lower than that on the London Metal Exchange.

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Incidentally, India has set a target of producing 10 million tons of aluminum by 2030, up from the present-day 3.4 million tons.

Steel imports are once again threatening India’s steel sector, spurring major steel companies to ask the government to impose steel import duties.

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In the past few months, representatives of steel companies like Tata Steel and JSW Steel have met steel ministry officers with a request that the Indian government look at the present steel import-export scenario and impose duties.

According to a Reuters report, Indian domestic producers are facing not only the issue of cheap imports from China, Japan and some Southeast Asian countries, they are also been buffeted by low domestic prices.

Now, there are reports coming in that the steel companies are seriously contemplating increasing prices, which seems like a contrarian position since consumers have the option of buying cheap, imported steel. At the start of the present financial year, India had turned into a net steel importer for the first time in two years. By June, imports had increased by as much as 15%.

JSW Steel has already hiked the prices by over $100 per ton; others are thinking of following suit.

The reason? An increase in some raw material prices and growth in international steel prices. Indian companies have explained their proposed hike was to be in sync with rising international prices.

Imports, however, are what are causing Indian steel majors a major headache.

Imports of stainless steel from Indonesia, for example, has grown by nine times, according to the Indian Stainless-Steel Development Association (ISSDA). ISSDA also feels that countries like Indonesia, Malaysia and others are allegedly abusing the Association of Southeast Asian Nations (ASEAN) free trade agreement.

The steel ministry is sympathetic to the demands of local producers, and may be contemplating some measures to curb the situation.

But it’s not clear exactly what the government plans to do.

Some reports said the new measures may be more in the nature of non-tariff measures. It’s a case of once bitten, twice shy for India on this matter. In 2016, it lost a dispute against Japan at the World Trade Organization (WTO) on charges that New Delhi unfairly imposed import duties to safeguard its steel industry.

JSW Steel’s Joint Managing Director Seshagiri Rao was quoted last month as saying there was an urgent need to raise duties on steel imports, dubbing them a “major threat” to domestic industry.

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In the first nine months, while exports from India fell by 38%, imports grew faster, Rao pointed out.

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Gold is back in the news in India, the second-largest consumer market in the world.

Gold prices have been moving upward, buoyed by several conditions, since January.

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On Feb. 6, for example, retail gold prices touched approximately U.S. $461 (Rs 33,000) per 10 grams in Mumbai and over U.S. $474 (Rs 34,000) in Ahmedabad, nearing new all-time record highs. This was in contrast to prices in London, which held flat in U.S. dollar terms.

Gold prices globally on the same day held firm after U.S. President Donald Trump’s State of the Union address, but a firmer dollar stopped the bullion’s gains. Spot gold was steady at $1,314.30 per ounce in intraday trading. U.S. gold futures were also steady at $1,318.20 per ounce.

Any rise in consumption by India is welcome, as it will push up global prices currently near an eight-month high.

Gold analysts anticipate a rise in India’s gold demand this year. The World Gold Council (WGC) recently said prices could go above the 10-year average.

The WGC estimated consumption this year in India would go up to 750-850 tons versus 760.4 tons of last year, according to Somasundaram PR, managing director of WGC’s Indian operations, as quoted in The Economic Times.

If one were to look at the consumption data of the last decade, demand by Indian consumers has averaged 838 tons.

What may push up gold consumption is more purchasing power in the hands of Indians this election year, as the present government unveils policies with an eye on the polls.

Much of this growth is anticipated from the country’s rural sector. Almost all of India’s gold is imported, and this incoming movement has been affected by the Indian government’s efforts to restrain its trade deficit by measures to discourage investors who used gold to evade taxes.

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In addition to this being an election year, the wedding season is another reason for the spurt in gold buying.

It was an expected development — so when it was announced, it did not come as much of a surprise to many in the steel sector in India (or even globally).

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An updated World Steel Association analysis of crude steel outputs by the steel-producing nations has shown that India bypassed Japan as the world’s second-largest steel producing country. India’s neighbor China continues to be the largest producer of crude steel, accounting for more than 51% of global production.

While world crude steel production went up 4.6% in 2018, touching 1,808.6 million tons (MT) in 2018 from 1,729.8 MT in 2017, China’s crude steel output went up 6.6% to 928.3 million tons in 2018 (from 870.9 MT in 2017).

India’s crude steel production in 2018 reached 106.5 MT, up by 4.9% from 101.5 MT in 2017.

Japan produced 104.3 million MT in 2018, down 0.3% from 2017. The European Union produced 168.1 million MT of crude steel, down 0.3%.

Others in the top 10 steel-producing countries included the U.S. at No. 4, having produced 86.7 MT of crude steel, and South Korea at fifth place with 72.5 MT.

India’s steel story has been on the positive path for a couple of years now, thanks to the country’s rapid infrastructure growth, requiring materials like steel, coal and cement. India’s steel minister recently told a meeting that the country was expected to pass the U.S. in steel consumption this year.

Minister Chaudhary Birender Singh, while addressing the fourth edition of India Steel 2019, pointed out that the trend in steel consumption in India was on the upswing because of the strong manufacturing sector, diversified demand demographics and accelerated expenditure on infrastructure, among other factors.

The World Steel Association seems to agree with this view.

In its report, it has forecast a steady demand for crude steel in China, while it expects demand in India to grow.

Steel experts concur that unlike China, where almost the entire steel growth story is propelled by infrastructure, the steel consumption in India will be driven by the twin engines of infrastructure as and the needs of its growing population.

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India’s use of steel has grown phenomenally in recent years to above 66 kg per person. The government’s goal is to bring it as close as possible to the global average of more than 200 kg per person.

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India’s coal sector clearly needs some urgent initiatives from the government in order to give it a boost.

Some analysts say it’s time the government opened up commercial coal mining to the private sector. This would have a dual effect —  it would attract global coal mining companies and also bring new technology and best practices into the country.

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Despite government promises to the contrary, there’s been heavy reliance on imported coal.

Last February, the government decided to open the sector to private participation, touted as a historic move. The Cabinet Committee on Economic Affairs also approved the methodology for the auction of coal mines and coal blocks.

But there’s no been much forward movement from then.

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In a late December report, the Indian government said it forecast the Indian automotive sector to attract between U.S. $8 billion and $10 billion in local and foreign investment by 2023.

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The Year End Review 2018 by the Ministry of Heavy Industries & Public Enterprises pointed out the sector had attracted $16.5 billion in foreign direct investment (FDI) between April 2000 and December 2016.

But the 2023 target may not be met if the government does not resolve the contentious issue of steel import rules soon.

Last August, the Indian Steel Ministry announced import rules for high-grade steel products, stipulating that foreign steelmakers must get Indian certification for high-grade steel products being used by Indian manufacturers. The Feb. 17 is fast approaching, but automakers have already registered their protests, saying they will not comply as they needed more time to do so.

The auto industry has dubbed the import rules as stringent, and though it is for specific high-grade steel products coming in from Japan and South Korea, they are used for vital auto components.

A Reuters report said India’s Heavy Industries Minister had written a letter in early January to his Steel Ministry counterpart, pointing out that the shipments of the auto component industry had started getting impacted. He voiced concerns in the letter that this “posed a significant risk of production stoppage of the whole automobile industry in the immediate future.”

Another issue which the minister pointed out was that if the government were adamant about imposing the new tax, auto manufacturers would simply stop importing steel and import the entire component itself, which would be detrimental to the “Make In India” plans of the government.

At a meeting mid-January between automakers’ representatives and government officials, the former pointed out that the new steel import norms were “a unrealistic protectionist measure” aimed at encouraging local steelmakers that could slow down manufacturing. Indian steelmakers did not manufacture special-grade steel, which is why Indian auto companies looked to other countries to fulfill this need.

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Indian automakers are seeking a year’s extension to comply with the new norms; now the ball is in the government’s court.

The new year for India started on a positive note where trade with the United States is concerned.

On Jan. 7, U.S. President Donald Trump called up his Indian counterpart, Prime Minister Narendra Modi to discuss, among other things, reducing the trade shortfall — a move that seems to have gone down well in Indian circles.

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The White House later issued a statement that said the two leaders had decided to strengthen the Indo-U.S. strategic partnership in 2019, and “exchanged perspectives on how to reduce the US trade deficit with India.”

Trade between the two nations hit a sour note in March 2018 after Trump imposed tariffs on imported steel and aluminum, seen as part of the U.S. president’s move to reduce the U.S. trade deficit and boost American manufacturing jobs.

Since then, a miffed India has threatened to retaliate, but has put off retaliatory tariffs four times, the most recent postponement now pushing the date to the end of January 2019.

Indian Steel Secretary Binoy Kumar told reporters in late December that India was in talks with the U.S. regarding exemptions to the steel tariffs. Similar relief would also be sought from Canada soon, he also revealed. His remarks came on the heels of demands made by India’s domestic steel industry.

India wants to meet the target of producing 300 million tons of steel by 2030-31, which means an increase in the per-capita demand of steel from the present 69 kg to about 167 kg.

But the Indian Steel and Commerce Ministries do not seem to be seeing eye-to-eye on trade tariffs.

A recent report in the Hindu Businessline said the steel ministry refused to accept any quantitative restrictions on exports of steel and aluminum to the U.S., which made it tough for the Commerce Ministry to ask the U.S. to remove the duties imposed in 2018.

The news report quoted an unnamed government official as saying the U.S. was unwilling to look at options other than the quantitative restrictions on imports at levels it suggested. But since the Indian Steel Ministry was not willing to accept any such restrictions, there could be no forward movement.

One source of apprehension stemming from a tit-for-tat penalty imposition was the potential fallout in diplomatic relations between the two nations.

Government calculations have shown India’s steel exports to the U.S. were down, but not so much with respect to its aluminum exports.

Besides India, the U.S. had imposed the tariffs on Japan, China, South Korea, Mexico and the E.U. members, among others.

India has to also now face a counter levy of import quotas from the European Union, further impacting its exports.

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According to a new U.S. Congressional report, if India were to go on with its retaliatory tariffs against U.S. agricultural products, it would adversely impact American exports to the tune of U.S. $900 million.

Many countries had imposed tariffs on American agricultural products to retaliate against Trump’s metals tariffs.