India Plans Price Curbs to Stem Chinese Steel Import Deluge

  • Government working on restructuring of loans to steelmakers
  • Planned government price measure to cover 45-50% of imports

India plans to step up measures to protect its debt-laden domestic steelmakers by imposing a minimum price on steel imports and studying loan restructuring as the mills struggle under a flood of cheap products from China.

The curbs are necessary to ensure a “level-playing field” for Indian companies after restrictions imposed in September failed to stop a decline in prices, Steel Secretary Aruna Sundararajan, the nation’s top bureaucrat for the industry, said in an interview in New Delhi.

“We cannot have a situation where after so much investment having gone into our local manufacturing, people are actually having to sell below their cost,” Sundararajan said Monday. India will monitor the quality of steel imported from nations such as China, South Korea and Japan, she said. The measures are expected to be in place by March.

Producers including China and Russia are aggressively selling steel at low prices, forcing governments from India to the U.S. to impose protectionist measures. Faced with a glut of domestic production, surging imports and prices trading around a six-year low, Indian steelmakers have sought safeguards against increasingly cheaper imports.

Loan Package

The government is also working with banks on “a financial package” for restructuring loans to steelmakers, Sundararajan said, without giving details. “The cost of capital is high in India especially at a time when global markets are down. We need to reduce their financial load. They need some reprieve.”

India’s iron and steel industry owes 2.87 trillion rupees ($43.3 billion) of loans. The big four steelmakers have the equivalent of $17.8 billion of loans and $7.7 billion of bonds outstanding, data compiled by Bloomberg show.

“Indian steel makers have been finding it difficult to get credit,” said Goutam Chakraborty, Mumbai-based analyst at Emkay Global Financial Services. “Most of measures that the Indian government is planning now should have come much earlier. These measures will probably begin to have an effect only by the end of January. The threat from cheap imports is still too big.”

Anti-Dumping

Chinese mills can undercut competitors because the government provides export rebates and subsidies for production, according to Roberto Cola, chairman of the Selangor, Malaysia-based South East Asia Iron & Steel Institute. Steel exports by China exceeded 100 million tons for the first time in the first 11 months, rising 22 percent from a year earlier, customs data show.

India is seeking minimum import prices for a range of products including hot and cold rolled coiled sheets, galvanized sheets and rods, Sundararajan said. Floor prices will be fixed by comparing costs of products in domestic markets to international benchmarks, she said. Prices of hot-rolled steel in India have fallen 26 percent in the past 12 months, according to data from Metal Bulletin.

India announced earlier this month the imposition of anti-dumping duties on cold-rolled flat products of stainless steel for five years as well as a probe on hot-rolled plates and sheets after Indian steelmakers including Steel Authority of India Ltd., JSW Steel Ltd. and Jindal Steel Ltd. complained.

The 20 percent duty imposed on hot-rolled coil in September slowed India’s monthly imports for the first time since at least April, government data shows, though purchases for the eight months through November rose 34 percent.

The “proposed minimum import price has to cover about 45 to 50 percent of the imports coming in,” Sundararajan said. “We may look at channelizing the imports through a few ports so that we can better monitor the quality. ”

Her ministry is also looking at longer term anti-dumping duties,  she said.
“The industry is preparing a case. We need to also see what kind of subsidies are being given in those countries to prove what is the actual cost of production there.”

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE