Why India Returns to Net Iron and Steel Materials Importer

Why India Returns to Net Iron and Steel Materials Importer

In 2018, India has surpassed Japan to become the world's second largest steel materials producer. According to the industry vision, India plans to achieve 300 million tons of crude steel production capacity in FY 2031. At present, the annual composite growth rate of crude steel production in India is 5.83%, which is much higher than the world average of 2.25%.

But why did India become a net importer of steel materials in fiscal year 2019, just as India's steel industry was making great strides on the road to capacity expansion?

According to industry analysis, there are several reasons for India's "identity conversion" in international steel trade.

First, the demand growth rate is faster than the release rate of production capacity, and the steel demand gap has been further widened.

It will take several years for projects in India's steel capacity expansion plan to be built, put into operation and eventually released. At the same time, India's domestic steel demand is still in the fast lane, which will inevitably lead to India's expansion of steel imports.

Secondly, the supply of high-end steel materials is insufficient, so it is imperative to increase steel import.

Automotive steel and high-end electrical steel account for a large proportion of the steel import in India. This shows that although the Indian automobile industry is developing rapidly and the local demand for high-end steel is gradually increasing, it is still difficult for the local steel enterprises to meet the demand for high-end products in terms of quantity and quality. Therefore, the "rescue" in overseas markets is helpless, but also unexpected.

Thirdly, the rising trade friction leads to the loss of traditional export market share.

In fiscal year 2019, India's steel imports grew by 4.7%, while its exports fell by 34%. It is not difficult to see from this set of data that India has re-emerged as a net importer of steel materials, and the sharp decline in exports is also a cause that can not be ignored.

Southeast Asia, Africa and other places are the main export flows of India's traditional steel materials. However, with the European and American trade barriers being higher than one day, and the Indian market as an important global steel consumption growth pole, it is full of attraction. Therefore, steel enterprises of Japan, South Korea, China and other major steel exporting countries have repeatedly "bumped into walls" in the European and American markets, and have turned their eyes to the east. In South Asia, Africa and other markets, the competition between their steel enterprises and Indian steel enterprises is becoming increasingly fierce. It is also reasonable that Indian steel enterprises' export market share is squeezed.