Indian Steel Imports: 'Int'l Steel Demand, Pricing Outlook Not Looking Sturdy', Sandeep Poundrik

Summary

In this interview with India's Steel Secretary, the challenges and future of the steel industry are discussed in depth. Key points include the sector's cyclical slowdown, the government's active role in supporting growth, and concerns about cheap imports. The conversation touches on safeguard duties, anti-dumping measures, and capacity expansion in India, with a focus on maintaining domestic competitiveness. The government is committed to protecting and enhancing the steel sector's capacity, but also stresses the need for efficiency improvements. Additionally, the Secretary clarifies the status of the proposed merger between Steel Authority of India (SAIL) and Rashtriya Ispat Nigam Limited (RINL).

Takeaways

• 😀 The steel sector in India is facing a cyclical slowdown, but the government is taking proactive steps to support it.
• 😀 India is experiencing robust demand growth for steel, unlike other major economies, with a 11% increase in demand from April to December 2024.
• 😀 Steel prices have dropped by around $100 in the last year, impacting the domestic industry, especially in flat product categories like ATR coil.
• 😀 India’s steel demand is expected to grow substantially, requiring an additional 120 million tons of capacity by 2030, with an investment of $120 billion.
• 😀 The domestic steel industry is seeking protection against cheap imports, and a safeguard duty investigation is underway to address this issue.
• 😀 The government is expected to decide on the safeguard duty by February 2025, after considering responses to the ongoing investigation.
• 😀 There is a distinction between safeguard duty and anti-dumping duty: safeguard duty applies to all imports, while anti-dumping duty targets specific countries.
• 😀 Currency depreciation, which has increased the cost of imports, will be considered in the safeguard duty investigation.
• 😀 The government is focused on ensuring the steel sector remains competitive globally, which includes investments in efficiency, technology, and raw material security.
• 😀 The government is committed to supporting the steel sector’s growth, but it recognizes that the sector must also improve its competitiveness to manage imports and pricing pressures.
• 😀 While there are no immediate plans to merge Steel Authority of India (SAIL) with Rashtriya Ispat Nigam Limited (RINL), the government is keeping RINL as a going concern, focusing on its turnaround and improving its efficiency.

Q & A

What is the current state of the steel sector in India?

The steel sector in India is experiencing a cyclical slowdown, but India is one of the few major economies showing robust demand growth. Despite this, steel prices remain under pressure, particularly flat products like ATR coil, which have seen a price drop from $680 to $580 in the last year.

How much steel does India consume, and what is the forecast for future consumption?

India consumed about 145 million tons of steel last year. With a projected demand growth of 9-10%, the country will need around 260-270 million tons of steel by 2030, which translates to a required capacity of over 300 million tons.

What challenges are faced by the Indian steel industry, and how is the government responding?

The Indian steel industry faces challenges like cheap imports, especially from countries with overcapacity, and the need for more capacity augmentation. The government is considering measures such as imposing safeguard duties to protect the domestic market, and it is committed to ensuring investments to maintain the sector's competitiveness.

What is the difference between safeguard duty and anti-dumping duty?

Anti-dumping duty is imposed on specific countries if their imports harm the domestic industry, while safeguard duty is applied to all imports and is designed to protect the sector from a sudden surge in imports, regardless of the country of origin.

What is the role of currency depreciation in the steel import industry?

Currency depreciation affects the landed price of imported steel in India, making imports more expensive. This factor will be considered by the Directorate General of Trade Remedies (DGTR) in their investigation.

What is the potential impact of a safeguard duty on the Indian steel sector?

If imposed, a safeguard duty will cover all steel imports and could help mitigate the price disparity between domestic and imported steel, offering some relief to the domestic steel industry.

Why are safeguard duties necessary, given India’s FTA agreements with many countries?

While Free Trade Agreements (FTAs) limit the impact of Basic Custom Duties (BCD), safeguard duties are applicable on all imports, including those from FTA countries. This makes safeguard duties a broader tool to protect the domestic steel industry from cheap imports.

What is the outlook for the future of the steel sector in India, especially regarding its competitiveness?

The steel sector in India is modernizing and focusing on improving process efficiency and adopting digital technologies like artificial intelligence to reduce costs. However, the global price scenario and overcapacity in other countries remain challenges. India is expected to become more globally competitive through these measures.

What role does the government’s policy play in supporting the steel sector?

The government is committed to supporting the steel sector by ensuring it remains competitive, encouraging investments, and protecting the sector from unfair trade practices like cheap imports. The government is also focused on ensuring sufficient capacity to meet growing demand.

What is the government’s stance on the merger of Steel Authority of India (SAIL) and Rashtriya Ispat Nigam Limited (RINL)?

Currently, there are no plans to merge SAIL and RINL. While both companies are important to the Indian steel sector, the government has decided to keep RINL as a going concern. RINL has shown improvement since the decision, and the government is focusing on its operational efficiency.