The domestic steel price in China is around $550 per tonne while export price is pegged at $650 per tonne which is the same as steel price in Indian markets.
Export price in that country is same as the domestic price here
KOLKATA: Even as the European Union (EU) launches investigations into whether Chinese steel is being dumped in Europe, the gap between India’s domestic steel price and Chinese export price has vanished.
As a result, the supply side dynamics of the Indian steel industry is on a knife edge.
The domestic steel price in China is around $550 per tonne while export price is pegged at $650 per tonne which is the same as steel price in Indian markets.
This is a double whammy for Indian steel producers. The $100 gap between domestic and export price in China provides leeway of steel mills there to lower export prices for shipments overseas and the artificially depressed yuan continuing to ensure healthy margins.
At the same time, with Indian domestic price now at par with Chinese steel, floodgates of imports could open up either if Indian steel companies raise prices, or the rupee, in sharp contrast to the yuan, continues to appreciate against the dollar, making imports cheaper in local currency.
“The Indian steel industry may be affected by a price war in absence of any tariff protection. The downward pressure on domestic prices could be $100 per tonne or equivalent to the price differential of Chinese domestic and export price,” said an official.
“In the period April-October, Indian import of steel was up 79% at 3.8 million tonne. Any downward price pressure from imports cheaper to the maximum extent of $100 per tonne will increase flow of imported steel into the domestic market.
Under the circumstances, in absence of tariff protection, Indian steel producers will be hamstrung in increasing prices to offset rising cost of raw materials particularly hard coking coal,” officials said. European steel producers have sought a 40% surcharge on imports, they said but refused to comment on whether Indian producers too have officially sought a similar tariff protection.
The European Confederation of Iron and Steel Industry (Eurofer) has provided EU with evidence that imports from China had increased in absolute terms and also in terms of market share.
According to information provided to EU, imports from China into Europe had gone up by 137% to 8.9 million tonne between January-September 2007. It, however, could not be confirmed whether the Indian Steel Alliance (ISA) has made similar approaches to the Indian steel ministry.
Interestingly, Corus, a Tata Steel affiliate along with ArcelorMittal, Thyssenkrup and others are members of Eurofer that has a combined steel producing capacity of 200 million tonne in Europe that is allegedly under threat from Chinese exports.
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