Notwithstanding slowing domestic demand, steel companies have raised concerns over rising steel imports at zero duty from countries such as Japan and South Korea that have signed a free trade agreement.
Steel imports in the June quarter were down 9 percent at 1.72 million tonnes, while exports declined 27 percent to 1.02 million tonnes. In the financial year ended March 2019, imports were up 5 percent at 7.84 million tonnes, while exports plunged 34 percent to 6.36 million tonnes. Though overall, steel imports to India have fallen due to weak demand, the proportion of duty-free imports has increased to 66 percent from 60 percent in the June quarter.
Amid growing import worries, the steel industry has urged the government to keep steel out of the proposed 16-member Regional Comprehensive Economic Partnership (RCEP) negotiations, which is to begin later this week.
Seshagiri Rao, Joint Managing Director, JSW Steel, said trade bodies have asked the government to keep steel under negative list in the RCEP negotiations, as it will open duty-free access for three more countries, including China.
Indian steel industry’s competition with China will not be a level-playing field, as they provide a lot of implied subsidies to boost exports, he said. Moreover, he added that once the industry is hurt by Chinese imports, India takes a lot of time to react and implement trade barriers.
Despite the global slowdown, steel production in China continues to peak, touching a high 89 million tonnes in May and falling marginally to 87 million tonnes in June. In the first five months of this year, global steel production is up to five percent but is almost flat excluding China, which alone recorded a production growth of 10 percent compared to last year. However, China has not exported much of its production due to the ongoing global trade war. Moreover, steel prices fell sharply in the US by 30 percent and between 5-10 percent in Europe and China.
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