'China’s slowdown may spell disaster for steel industry'
Indian steel industry which is already hit by cheap imports is expected to face more challenges due to market turbulence triggered by the dramatic slowdown of Chinese economy, an industry body has said. “Troubles within China are expected to spell disaster for the Indian steel industry, as desperate Chinese manufacturers would dump their products more rigorously abroad, having already registered a growth of 232 % in their shipments to Indian ports,” said the Associated Chamber of Commerce & Industry (ASSOCHAM), citing its own study. In 2014, steel exports from China were 93 million tonnes, up by 50.5% year-on-year. At the same time, India’s steel imports increased by over 71% compared to the inbound shipment of the previous fiscal. “Chinese steel into India during the year surged by over 232%, widening India’s trade deficit with China alone by $2.66 billion,” the study said. With the Yuan devaluation, the impact is being felt by Australian, Taiwanese and Japanese currencies as well, which would ultimately make Chinese exports cheaper, thus, creating more room for their surplus quantity in growing markets like India, the ASSOCHAM said. Besides, defective and substandard quality products dumped in the Indian market is also making a dent to the domestic steel manufacturing. “Due to absence of adequate quality standards on imported steel, China was able to cleverly disguise its commodity grade steels as alloy-steel by adding 8-ppm i.e. 0.0008% or more of boron. In this manner it was able to penetrate into the Indian market and also encash the benefit of export tax rebate ranging between 9% and 13%,” the study said. India’s imports of defective metal increased by 30% in 2014 -15. The import of hot-rolled steel alone witnessed a sharp rise of 99% along with cold-rolled steel rising by 81%. Apart from India, several other countries have been facing threat due to surplus supply of steel products from China. “Globally, countries which have become the victims of surplus, cheap and non-standard steel from steel-surplus nations are seeking various kinds of trade remedial measures on steel imports mainly from China, Japan and Korea”, said D S Rawat, Secretary General, ASSOCHAM. Every country that became prey to China’s unfair exports has been taking safeguard, anti-dumping or countervailing duty (CVD) route to check the surplus supply from China. However, the Indian steel industry has not been able to implement a single action till date for carbon steel, Rawat said, adding that India’s only action in form of the quality order on 16 steel products is still pending and awaiting recommendations on the WTO website. China produces 400 million tonnes of surplus steel in addition to its domestic demand of 741 million tonnes and the excessive capacity of China is four times the total production capacity of India.
August 29, 2015 | 3:12pm IST.