About 3 million tonnes of Chinese steel landed on Indian shores in January-April 2007, as Chinese steel companies rushed to complete overseas shipments.
KOLKATA About 3 million tonnes of Chinese steel landed on Indian shores in January-April 2007, as Chinese steel companies rushed to complete overseas shipments and beat government measures to make steel exports more expensive. Previously, Indian import of steel from the dragon country had been nil.
Indian steel producers are not hitting the panic button. Not yet. But with imports from China touching 7.5% of total Indian production of about 40 million tonnes, the industry is keeping close tabs on shipments of steel into the country, even as six north American steel producers have petitioned US regulators for higher imposition of import duty on steel from China.
Exports of steel from China soared 132% to 21.3 million tonnes in January-April as Chinese steel producers raced to beat government measures like reduction in export rebates, imposition or increase in export taxes on some product categories and licensing of exports to make export more expensive.
These measures have started to take a salutary impact on checking rising Chinese steel sales in international markets, with May exports pegged at 6.17 million tonnes, down from an all time monthly high of 7.16 million tonnes in April 2007.
However, leading steel analysts forecast that this salutary impact will only be temporary, since lower exports will translate to higher availability of products in the domestic market, pulling down prices. And this, in turn, makes exports more lucrative once again, as gap between domestic price and international price would increase.
The Chinese government had been forced to implement measures to check steel exports in face of brewing trade war with US, where imported Chinese steel surged to 45 million tonnes in 2006, double that of in the previous calendar. This has prompted six US steel producers to seek higher import duties on Chinese steel.
Predictions of faltering Chinese measures to curb exports, coupled with a record production of 50 million tonnes in South Korea, and smaller nations turning exporters, like Iran, which has exported 2 million tonnes, have all given rise to fears of soft international prices in second half of 2007.
However, officials of two of India’s largest steel companies-Tata Steel and Steel Authority of India Limited (SAIL) — played down impact of imports from China on grounds that much of steel landing on domestic shores were of low grade, while most Indian steel producers had moved up the value chain to meet demand from domestic customers.
The officials also said that domestic demand was very fragmented and hence requirement of relatively small quantities could not be met through imports. Domestic Indian producers have also become steel solution providers rather than mere suppliers. An example cited is of SAIL, which increased its dealer network to 192 across domestic urban and rural markets, from 64 earlier.
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