The steel war between India and China is heating up and ArcelorMittal is moving
India, despite being the world's second largest steel producer, continues to deal with dependence on steel imports from abroad, but this is holding back domestic development. In recent months, China has emerged as a major exporter of steel to India, prompting protests from the Indian domestic industry. Indeed, India's steel imports in June 2023 increased by 5.9% MoM and 7.6% YoY. In addition to China, the country has also seen the shares of Vietnam increase. The main concern of local steel producers is to protect their interests by avoiding negative impacts on local steel prices.
Impact of Chinese steel exports on India and steel prices
The new influx of low-priced steel from China, Japan, Vietnam and Russia has put severe pressure on Indian steelmakers. In June 2022, China's steel exports share was 26.1% of India's steel imports, while Vietnam's was 1%. However, as of June 2023, China's share of imports rose to 37.1%, while Vietnam's contribution rose to 4.8%.
Imported steel is often sold at significantly lower prices than its Indian counterparts. This creates formidable challenges for Indian manufacturers trying to stay competitive. As a result, many Indian steel mills have felt forced to close or reduce operations, resulting in substantial job losses in the industry, and India has doubts whether this steel is commercially dumped.
Indian steelmakers are demanding an import tax
In response to the negative impact of Chinese steel exports, Indian producers have recently urged the government to impose a tax on imports. The rationale behind this appeal is to level the playing field and protect the Indian steel industry from unfair competition. Furthermore, it is a classic strategy followed by countries that want to develop their industry, which is often possible only with a protectionist phase.
However, for the time being, the Indian government appears to be hesitant to implement such a policy. The government's main concern is reportedly that a tax on imports could lead to higher steel costs for Indian consumers, thus slowing down other industries, such as engineering and auto.
That said, the Indian government continues to weigh the benefits and drawbacks of imposing these tax measures. Analysts expect a decision in the near future as the country tries to strike a balance between consumer interests and safeguarding the domestic steel sector.
ArcelorMittal's plans for India
Meanwhile, major global steel firm ArcelorMittal has plans to expand its steelmaking capacity in India. Currently the company has a capacity of 6.6 million tonnes per year (MTPA) in India. The trustees aim to increase it to 8.6 MTPA by the end of 2024. According to the Hindu BusinessLine , to achieve this goal ArcelorMittal will invest US$1 billion in a backfill project which is expected to be completed by the end of 2023. The project will allow the company to improve the production of flat steel products, including hot rolled coils and cold rolled coils.
In addition, ArcelorMittal plans to invest in a new downstream plant for the automotive sector in India. This is hoped to facilitate the production of high quality steel for the automotive industry. The company has formulated a comprehensive plan to scale up the capacities of Hazira, Gujarat to 15 MTPA by the first half of 2026.
Steel industry experts believe the decision to increase steelmaking capacity in India is an indication of ArcelorMittal's confidence in the Indian market. Indeed, ArcelorMittal's investment is likely to play a crucial role in meeting the growing demand for steel in the country, leading to job creation and contributing to economic growth. This could not only help reduce steel prices in the country, but also further strengthen its position as a major steel producer.
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The article The steel war between India and China is heating up and ArcelorMittal is moving comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/si-scalda-la-guerra-dellacciaio-fra-india-e-cina-e-arcelormittal-si-muove/ on Sat, 05 Aug 2023 16:27:20 +0000.