Indian steel exports have been struggling due to overcapacity and weak domestic demand in China, prompting the world’s second-largest economy to flood the global market with ultra-cheap steel. In May 2024, Indian steel exports were recorded at 0.5 million tonnes (MT), nearly 25% lower than the previous month. According to BigMint, a market research firm, export prices of hot-rolled coil from China fell to $520 per tonne, putting continued pressure on global steel prices. In contrast, Indian export prices remained higher, ranging from $650 to $660 per tonne.
China’s crude steel production saw a significant increase of 8.1% month-on-month in May, reaching 92.86 MT. This rise in production has led to a substantial increase in Chinese steel exports, which totaled 94 MT in 2023, a 38% increase over the previous year. This trend is expected to continue, potentially surpassing 100 MT in the current calendar year.
Increased Imports and Domestic Demand
India’s imports of finished steel reached 8.3 MT in fiscal 2024, marking a 38% increase year-on-year. Major contributors to this surge were China, South Korea, Japan, and Vietnam. Imports from Vietnam alone surged by 130% year-on-year, highlighting a significant shift in trade patterns. Despite a 11.5% increase in exports of finished steel, totaling approximately 7.5 MT, the rise was insufficient to counterbalance the growing volume of imports.
The European Union (EU), India’s largest export market for steel, presented a mixed scenario. Exports to the EU increased by 51% in fiscal 2024, contributing to 36% of India’s overall steel export basket. This rise came after a challenging first half of the fiscal year, where exports had declined, only to recover strongly in the latter half.
Domestic Market Focus
The competitive pressures from Chinese steel in the global market have significantly affected India’s export potential. However, strong domestic demand has provided a buffer for the Indian steel industry. India’s steel consumption grew by 13.6% in fiscal 2024, reaching 136 MT, driven by ongoing infrastructure expansion and vibrant development in related sectors. Finished steel production in India also increased by 12.7% year-on-year, reaching 139 MT, supported by favorable government policies and substantial investments in expanding production capacities.
The Indian steel industry is now focusing on domestic demand as exports remain a margin-dampening prospect. Competitive prices in West Asia and Southeast Asia, coupled with a deteriorating market situation in Europe due to weak demand and stringent regulations, add to the challenges
The transition from a net exporter to a net importer of steel presents both challenges and opportunities for India. Managing the influx of cheaper imported steel while bolstering domestic production and maintaining export competitiveness will require strategic adjustments. Policymakers and industry stakeholders must navigate these dynamics to sustain growth and strengthen the country’s position in the global steel market.
