By Neha Arora
MANDI GOBINDGARH, India- India’s construction boom with its gleaming high rises and multilane highways was supposed to drive up domestic steel sales, but Jogindra Group’s mills in northern Punjab state are filled with unsold inventory.
A flood of cheap Chinese steel has pushed India’s smaller mills to scale down operations and consider job cuts, as the South Asian nation joins a growing list of countries contemplating action to stem imports.
India, the world’s second-largest steel maker, turned into a net importer in the last fiscal year, sounding alarms in New Delhi about what a weakened sector portends for the security of future infrastructure projects and steel-reliant industries.
At small and medium-sized mills, which account for 41 percent of India’s total steel output and employ more than 1.5 million people, capacity utilization has dropped by nearly a third over the past six months, executives from a dozen such producers said in interviews.
In Mandi Gobindgarh, Punjab’s “steel city”, the cluster of mills is unable to compete with Chinese imports often sold at up to 10 percent less than Indian offerings.
“If we are not able to compete in the market, our plant won’t run at full capacity,” said Adarsh Garg, chairman and managing director at Jogindra Group.
“We will be forced to lay off 10 percent to 15 percent of our employees here if this continues,” Garg said.
Despite offering discounts on its products, the company’s sales have dropped 30 percent to 35 percent in the past six months, forcing it to cut output by nearly a third, Garg said.
Raju John, director general of the Builders Association of India, said developers and engineering firms are lured by the savings. Chinese steel sells for $25 to $50 a metric ton cheaper and sometimes as much as $70.
Finished steel imports from China reached an all-time high this year, up more than 30 percent, and included both hot-rolled steel used in construction and galvanized steel for the automobile industry.
The influx has battered domestic sales while China’s lower prices have also eroded Indian exports.
China produces more steel than the rest of the world combined, and its bargain offerings on the global market have prompted widespread trade complaints.
That output, expected to continue in 2025, coupled with heightened export volumes since China’s property crisis battered demand from the domestic construction industry, has rattled steel markets overseas, even in countries with a strong local industry.
“Surging imports at predatory prices with reducing export opportunity is today a major concern for the survival of (the) Indian steel industry,” the Indian Steel Association said in a presentation to the government.
The association said steel companies are struggling to initiate expansion plans after their profit margins dropped by 68 percent to 91 percent so far this fiscal year. – Reuters
