Import prices for Chinese steel products are much lower than domestic ones
The influx of cheaper Chinese steel has had a significant impact on the profitability of Indian steel companies, BigMint reports.
Import prices for steel products from China are significantly lower than domestic prices, even with the current basic customs duty of 7.5%. This has led to lower profit margins and threatens the investment plans of the Indian steel industry. However, even if the import tax is raised to 12.5%, Chinese steel will still be cheaper than Indian steel.
India’s steel industry is facing a decline in profitability due to cheaper imports of rolled steel – in the first quarter of fiscal year 2024/2025 (April-June), it fell by 58-95% compared to the same period last year.
Nevertheless, India is increasing its steelmaking capacity to achieve its goal of producing 300 million tons of steel per year by 2030. However, constant disruptions in the investment cycle jeopardize the planned investments.
The country has significantly increased steel imports in recent years. In fiscal year 2023/2024, India became a net importer of steel, and this trend is continuing. China’s share of India’s imports of steel products has increased significantly, reaching about a third in FY2023/2024.
The Indian Steel Association (ISA) has expressed concern about the diversion of Chinese imports through ASEAN countries, particularly Vietnam. This takes advantage of the zero-duty tariff under the Free Trade Agreement between India and the region. At the same time, significant investments made by Chinese companies in ASEAN are aimed at export markets such as India.
In April-August this year (5 months of FY2024/2025), India increased its imports of rolled products from China to 1.1 million tons, up 31.7% year-on-year. These volumes represent a seven-year high. Total imports of rolled products to the country in the period amounted to 3.7 million tons, a six-year high.
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