India Becomes Steel Importer Amid Surging Global Trade Shifts

In a significant development for the steel industry, CRISIL’s latest sectoral report reveals that India has transitioned into a steel importer in FY2024. The report highlights that international trade dynamics have undergone substantial changes recently, with weak global markets and the competitive pricing of Chinese steel adversely affecting India’s export landscape. Despite these challenges, robust domestic demand remains a strong positive for the Indian steel sector.

According to provisional government data, India imported 8.3 million tonnes (MT) of finished steel in fiscal 2024, marking a 38% increase compared to the previous year. The major contributors to these imports were China, South Korea, Japan, and Vietnam. China led the pack, with its steel exports to India reaching 2.7 MT. This surge is attributed to lower investments in China’s real estate sector, leading to decreased domestic steel consumption and prompting Chinese steel mills to seek international markets to boost their volumes.

South Korea and Japan maintained their export volumes to India, with South Korea exporting 2.6 MT and Japan 1.3 MT. Vietnam also emerged as a significant exporter, with its steel exports to India rising by 130% year-on-year. Interestingly, Vietnam, itself a major steel exporter, was one of the top destinations for Chinese steel exports. In the calendar year 2023, China exported approximately 94 MT of iron and steel products globally, reflecting a 38% year-on-year increase.

In terms of product types, flat steel products dominated India’s imports, accounting for 95% of the total finished steel imports in fiscal 2024. Within this category, non-alloys made up 76% of the flat steel imports. The most imported steel types were hot-rolled (HR) coils and plates, which represented 62% of the import volume and saw a significant 117% increase. Galvanized plain and galvanized corrugated (GP/GC) sheets, along with electrical sheets, also experienced notable increases in import volumes, rising by 41% and 25%, respectively, with China being the primary source of these imports.

A notable shift was observed in the distribution of imported products in fiscal 2024 compared to fiscal 2019. There was a decline in the imports of electrical sheets, a specialty grade steel. This trend is expected to continue, driven by the Indian government’s Production-Linked Incentive (PLI) scheme, which aims to promote the production of specialty grade steel in India from 2024 to 2030. The scheme has already approved several large integrated players in the electrical steel category. Across all product categories, 57 Memorandums of Understanding (MoUs) have been executed, aiming to generate an investment of Rs 29,500 crore, which is expected to add 25 million tonnes of additional capacity for specialty steel by fiscal 2028. As of December 2023, Rs 12,900 crore had already been invested, with a cumulative investment of Rs 26,000 crore anticipated by the end of the current fiscal year.

The trend of rising imports has persisted into fiscal 2025. In the first two months, April and May 2024, India imported around 1.14 MT of finished steel, marking a 20% year-on-year increase. This ongoing rise in imports underscores the shifting dynamics in the global steel market and highlights the challenges and opportunities facing the Indian steel industry as it navigates these changes.