Title: India may remain net importer of steel for second consecutive year
A string of safeguard measures imposed on imported steel products by the EU, in the aftermath of the US import levies and escalating trade tensions, is believed to have dented Indian exports to the EU
India is likely to close FY20 as a net importer of steel if trends during the first four months of the fiscal year are anything to go by.
In FY19, India had turned into a net importer of finished steel products after recording two consecutive years of export surplus in FY17 and FY18.
During the April-July period of this fiscal, the country continued to be a net importer of steel. A steel industry update by CARE Ratings showed the imports of finished steel products exceeded exports by 1 million tonnes. Steel exports from India in the period under review dived by 23.4 per cent to 1.5 million tonnes (mt). Despite a 6 per cent fall, import of finished steel products remained high at 2.5 mt.
A string of safeguard measures imposed on imported steel products by the European Union (EU), in the aftermath of the US import levies and escalating trade tensions, is believed to have dented Indian exports to the EU. Countries in the EU like Italy, Belgium and Spain accounted for 5-12 per cent share in India’s total finished steel exports in FY19.
“Unless the government announces a stimulus package and measures to protect the indigenous steel industry, imports will continue to be in excess of our exports. Most of the imports into the country are driven by South East Asian countries which enjoy duty concessions as they are bound by Free Trade Agreements (FTAs) with India," said a senior executive with a steel company.
In FY19, India imported around 3.1 mt of steel from the Republic of South Korea, followed by China (1.8 mt) and Japan (1.2 mt). Both Korea and Japan are tied by FTAs with India. Steel exports from South Korea are getting diverted to India after the US treasury, in March 2018, slapped import duties of 25 per cent and 10 per cent on foreign made steel and aluminium, respectively. In calendar 2017, US sourced 10 per cent of its finished steel products from South Korea.
Buffeted by headwinds like US protectionist duties and FTA sops, the domestic steel companies are vexed over talks of India ratifying the Regional Comprehensive Economic Partnership (RCEP). RCEP is a trade bloc of 11 Association of South East Asian Nations (ASEAN) countries and five more states - China, Japan, South Korea, Australia and New Zealand. Steel producers feel that India's decision to join RCEP will increase the imports of finished steel, especially from China.
During FY19, steel exports from India plummeted 28.2 per cent to 8.4 mt whereas imports rose 6.8 per cent to 8.8 mt.