The Economic Survey 2023-24 of India highlights the adverse impact of China's struggling real estate sector on its steel industry, leading to significant overcapacity and a subsequent decline in global steel prices. This scenario has exerted considerable pressure on steel producers in countries such as India, Vietnam, and Brazil.
Additionally, the survey pointed out India's recent status as a net steel importer. In the fiscal year ending March 2024 (FY24), India transitioned to a net importer of finished steel, a shift from its decade-long status as a net exporter, primarily due to price differences between international and domestic steel markets.
The survey also noted a rise in India’s dependency on imported coking coal, a key raw material for steel production, increasing from 56.1 million tons in FY23 to 58.1 million tons in FY24.
According to Cybex data, Indian hot rolled coil imports surged 42.95% month-on-month to 208,469 tons in June, while exports dropped by 25.6% to 48,719 tons, maintaining India’s status as a net importer.
As a result, low prices in the global market have led to a price gap between domestic steel and imported steel, which in turn has led buyers to turn to imported steel.
According to market experts, the domestic market remains under pressure from stagnant domestic and export demand. Moreover, if imports continue to grow exponentially every month, Indian mills will find it difficult to maintain competitive prices, experts said.
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