India's steel industry is facing significant challenges as recent data from the Joint Plant Committee reveals a sharp decline in finished steel exports. From April to August, exports fell by 39.6% compared to the same period last year, totaling just 1.92 million metric tons. This downturn is primarily attributed to weakening demand from the European Union, traditionally a key market for Indian steel.
The impact of this decline is particularly evident in India's trade with major EU destinations. Exports to Italy, the leading EU market for Indian steel, saw a dramatic decrease of 48.3% year-on-year, amounting to 360,400 metric tons. Similarly, shipments to Belgium fell by 25.6% to 223,300 metric tons, while exports to Spain experienced an even more severe drop of 51.7%, reaching only 133,000 metric tons. These figures underscore the widespread nature of the demand slump across the EU.
Flat steel products, which constitute a significant portion of India's steel exports, have been hit especially hard. Exports in this category plummeted by 43.7% year-on-year to 1.45 million metric tons. Within this segment, hot-rolled coil and strips experienced the most severe decline, with exports plunging by 62.8% to 410,000 metric tons. This sharp decrease in flat steel exports highlights the sector's vulnerability to global market fluctuations.
Contrasting with the export decline, India's steel imports have surged. The country saw a 33.9% year-on-year increase in finished steel imports, reaching 3.72 million metric tons over the April-August period. This shift has transformed India into a net importer of steel for the first five months of the fiscal year 2024-25, with imports exceeding exports by 1.8 million metric tons. The situation is further complicated by the fact that China, accounting for 30.4% of these imports, has increased its steel shipments to India by 31.7% compared to the previous year.
The Indian Ministry of Steel has expressed concern over these developments, noting that the global steel sector is witnessing a wave of trade protection measures. Countries are responding to low-cost imports and perceived unfair trade practices, with the European Union imposing anti-dumping duties of up to 25.30% on certain steel products and a 25% safeguard tariff on steel imports exceeding set quotas. The ministry highlighted India's vulnerability to global trade diversion, pointing out the lack of trade protection measures in place.
The ministry also addressed the issue of falling domestic steel prices, attributing it to declining international prices and alleged dumping of steel by China at low prices. This situation has prompted the ministry to assess the market conditions and consider appropriate actions to protect the domestic industry. The challenge for Indian policymakers lies in balancing the need to support local producers while maintaining competitive pricing in the global market.
