India’s finished steel exports drop to lowest in three years

India’s finished steel exports in May fell to their lowest in three years as shipments to traditional markets in the European Union (EU) and Nepal shrank, preliminary government data reviewed by Reuters showed.

India’s steel ministry has sought an immediate increase in import duties on finished steel products to 15% from a range of 7.5% to 12.5%, citing a threat from Chinese imports and excess global capacity, an internal note reviewed by Reuters showed.

The steel ministry has proposed the higher duties as part of its recommendations to the finance ministry for the upcoming 2019-20 budget that is due out on July 5.

India exported 319,000 tonnes of finished steel in May, down 28% from the same month last year and the lowest level since April 2016, the data showed.

Steel exports to the EU dropped 55% in May, led by fewer shipments to Italy, Belgium and Spain, which together made up about 80% of India’s overall exports to the region.

That comes amid ‘safeguard’ measures by the EU that are designed to limit incoming steel and prevent a surge of imports as a result of Washington’s 25% import tariffs, which have effectively closed the US market.

Indian exports to Italy slumped 65% to 23,000 tonnes, according to the data. Exports to Spain fell 41% to 13,000 tonnes, while shipments to Belgium were down 42% at 25,000 tonnes.

India, which typically ships cold-rolled coil, galvanized steel and some long products such as bars and rods to the EU, saw a decline in these shipments by as much as 30%.

India’s exports to Nepal, the top destination last year, were down 22% at 63,000 tonnes.

Shipments were also substantially lower to Malaysia and Sri Lanka, which were among the top 10 export destinations last year.

Exports of steel plate, which is one of the flat products that comprise most of India’s steel exports, fell 60% to 14,000 tonnes, the data showed.

Shipments of pipes, which are typically the main steel product exported to the United States, dropped 97% to 2,000 tonnes.

Overall, India’s finished steel exports were down 30% during April-May and the country remained a net importer.

Hit by low exports and facing higher imports, India’s steel ministry has been pushing for higher import duties. “The US-China trade war is threatening Indian markets as China looks for alternative markets” for its steel exports, India’s steel ministry said.

Citing the vulnerability of local mills, the ministry said the nation’s steel sector needs “protection from unfairly traded cheap steel imports” as well as lower input costs.

“Peak rates (for all steel products) may be raised to 25% to meet any contingency arising from potential adverse global market turmoil,” it said.

Existing anti-dumping and countervailing duties have been rendered ineffective by the volatility in steel prices, the ministry said.

The steel ministry said government revenues could increase by 13.66 billion rupees ($196.1 million) if the import duties were implemented, although it is the finance ministry that makes the final decision.

The steel and finance ministries did not immediately reply to Reuters emails seeking comment.

India turned from net exporter to net importer of steel during the 2018/19 fiscal year as local demand increased and imports jumped from Japan, Korea and China.

Japan, South Korea and member countries of the Association of Southeast Asian Nations, which all have free trade agreements on steel with India, accounted for 58% of its imports of the alloy, while 18% of its incoming steel came from China.

Reuters previously reported that India feared Chinese steel flooding its markets as fallout from Beijing’s escalating trade war with Washington.

Over 50% of India’s imports of wire rods and bars - both long steel products used in construction - came from China last year, government data showed.

India’s top four steelmakers - JSW Steel, Tata Steel, state-owned Steel Authority of India and Jindal Steel and Power - together control over 45% of India’s total steel production. The producers have been complaining about steel being dumped into India for the last several months.

India’s steel ministry has also sought cuts to import duties on coking coal, steel scrap and graphite electrodes to reduce raw material costs for making steel.

Meanwhile, India won a World Trade Organisation (WTO) challenge to solar industry incentives in eight US states on Thursday, although the United States told the panel the ruling would have little or no impact.

India brought the dispute to the WTO in 2016 after a successful US challenge to India’s own solar power policies, which Washington said had cut US solar exports to India by more than 90%.

Reuters