Steel Mills Cut Production as Imports Surge, Trade Deficit Widens

In a development that could put upward pressure on domestic steel prices, key Indian steel makers, barring Jindal Steel and Power Ltd (JSPL) have cut or kept steady their finished steel production in the first 11 months of this fiscal (April–February). The industry claims “unplanned outages,” but some analysts believe the slowdown is a strategic response to rising imports and a growing trade deficit.

India’s steel sector has struggled against a surge in low-priced imports, especially from China and other Asian nations. Such a flood has raised competition, exerting downward pressure on domestic steel prices. With depressed market conditions, mills may be trying to stabilize or raise local prices by cutting production.

The production cuts come as India’s steel trade deficit has increased substantially. The nation has been importing more steel than it has exported, raising industry concerns and calls for protective measures. The steel producers have been seeking the imposition of higher import duties or safeguard measures to protect domestic markets from cheaper overseas steel.

While output has been scaled down across the board, JSPL is an outlier here, holding or likely boosting its output. The company has stuck with its aggressive strategy, relying on size and market position to see it through the current difficulties.

If other major players cut steel production, it could have a wider impact on the economy, and maybe affect sectors with heavy reliance on steel, such as construction and infrastructure. Moreover, in the backdrop of global steel price volatility, any uptrend in domestic price would have an impact on overall project cost.

With the end of the fiscal year approaching, whether the government pulls the lever on commercial policies or steel mills naturally evolve in response to pressures of the market will be some of the things that market experts will keep track of.