As the Indian steel industry grapples to find a foothold in uncertain market conditions, a few market participants believe the country needs to safeguard itself from lower-priced imports from China.
Speaking at a webinar arranged by All India Induction Furnaces Association (Aiifa), Mukesh Bhandari, CTO of Electrotherm India, stated Chinese mills are known for their aggressive production. Amid the COVID-19 pandemic, China’s government has already increased its rebates from 10pc to 13pc to promote overseas trade. This could lead to dumping of steel by China into other countries.
Global miner BHP expects steel production in China to rise in 2020, as reported by Davis Index. Though output for March declined by 1.7pc, blast furnace utilisation rates have reached 79pc in April. Fearing such lower-priced imports could harm the domestic steelmakers, the European Union (EU) looks to review its safeguard measures. EU member countries have steel import quotas in place. Until the COVID-19 outbreak, there was a possibility of these quotas increasing by additional 5pc. But considering that prolific producers like China could divert their piled-up inventories, EU is likely to review this quota expansion.
V R Sharma managing director at JSPL, a major integrated steelmaker in India, stated at the webinar that China amid COVID-19 has been importing semi-finished steel from many countries, including India. Post lockdown, their domestic steel demand has risen. He further added that JSPL has sold over 500,000mt of plates and round billets in Southeast Asia and European markets. In the second week of April, Davis Index had heard trades for billets at $355-356/mt fob India or $375-376/mt cfr China for May shipments. Trades for shipments by end of April were heard at $380-385/mt fob India or $400/mt cfr China.
Bhandari, however, feels that China is known for its strategy of conserving domestically produced raw material and importing the same material from other countries for immediate consumption when it available at discount.