Indian Steel Imports Up 66%, China Provides 64% of Hot-rolled Coil Imports

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Researched by Industrial Info Resources (Sugar Land, Texas)--Indian steel imports were 3.66 million tons from April through July 2010, representing a 66% increase from the same period last year, due to higher demand from the automotive and construction sectors. Domestic steel producers are worried that 64% of hot-rolled coil imported into the country during the period originated from China.

The Indian Steel Ministry has turned down requests from the industry to implement quantitative restrictions or higher import levies on steel imports from China. The ministry has asked domestic steel producers to approach the Commerce Ministry's Directorate General of Anti-Dumping and Allied Duties, as well as the Directorate General of Safeguards if the increased imports from China cause 'injury' to domestic steel producers.

According to data released by the Indian steel ministry, of the 1.7 million tons of hot-rolled coil imported, 1.1 million tons, or 64%, originated from China. The balance came from Eastern European countries for subsequent conversion into cold-rolled coils.

"This trend is extremely distressing and disruptive for our own sales and inventory planning," officials with Steel Authority of India Limited (SAIL) (BSE:500113) (New Delhi) said.

However, expressing a contrary view, H.M. Nerurkar, the managing director of Tata Steel Limited (BSE:500470) (Mumbai), said, "I am not surprised by the high steel imports that are taking place. India is likely to remain a net importer for a long time, as it has not invested adequately in greenfield projects."

The price of imported hot-rolled coils is about 10% cheaper than domestically produced hot-rolled coils, which cost between $713 and $734 per ton. Imported steel products attract a 5% import duty.

According to government data, from April through July, Indian steel consumption was up 10.7%, reaching 20 million tons, while finished steel production in July increased marginally to 4.95 million tons. Demand in July was up 6.7% to 5.07 million tons, leading to a 31.7% rise in imports, which were about 900,000 tons. The rise in imports during the April-July period was in line with trends in the demand-supply pattern.

The higher imports from China came despite the Chinese government's withdrawal of incentives to export steel products. Senior officials at Indian steel companies, who declined to be identified, claimed that a few Chinese producers were innovatively bypassing export restrictions by implanting boron into steel shipments to pass it off as an alloy that is outside the range of export restrictions.

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