Editorial


Cheap imports hurting domestic stainless steel sector

India's stainless steel demand in 2021-22 was 3.7-3.9 MT. Over the fiscal years 2022-2025, stainless steel demand is expected to expand at a CAGR of 6.6-7.5 percent, reaching 4.6-4.8 million tonne (MT). Construction, infrastructure, and manufacturing, all of which contribute significantly to GDP, are likely to fuel development.

Thus, by fiscal years 2040 and 2047, consumption is predicted to rise 12.5-12.7 MT and 19-20 MT, respectively. India's installed stainless steel capacity is 6.6-6.8 MT as of March 2022.

To meet the expected demand, India must build sufficient capacity while boosting utilisation. India is the world's second largest consumer of stainless steel and one of the fastest-growing markets.

The country's per capita stainless steel consumption has more than doubled to 2.5 kg in 2022 fiscal from 1.2 kg in 2010.

However, the sector still faces significant hurdles, since the government's decision to eliminate import restrictions on stainless steel has resulted in Chinese and Indonesian businesses dumping their products into the Indian market, capturing up to 40% of market share.

Import duties on stainless steel were first suspended in the FY22 union budget and then totally eliminated in the most recent budget. This has resulted in a significant surge in stainless steel imports from China and Indonesia.

Stainless steel imports from China and Indonesia increased by 184% in FY22 compared to the previous year, accounting for one-fourth of India's consumption. In the month of January, the percentage of imported stainless steel from these nations reached 40%.

In her February budget speech, Finance Minister Nirmala Sitharaman announced the elimination of anti-dumping and countervailing duties on stainless steel "in the greater public interest given the current high metal prices."

Dumping of imported stainless steel, on the other hand, was affecting Indian MSMEs. When the whole globe had levied import duties on Chinese and Indonesian stainless steel, there was no justification for eliminating the duties.

According to data, major consumers like the United States, Europe, Brazil, and Korea levy duties ranging from 17 to 190 percent on Chinese and Indonesian stainless steel. Even China imposes an anti-dumping charge of 20.2 percent on Indonesian steel. India, on the other hand, does not levy such duties.

 

As per industry forecasts stainless steel melting activity in India is estimated to have reached 1.1 million tonne, in the first three months of this year. However, production in the subsequent two quarters may face negative pressure. A recently announced export duty on several steel products is likely to deter sales to third countries. Domestic steelmakers may cut output, as a result. Furthermore, cheap imports from Indonesia are taking an increased share of the local market.