India sees 25% jump in steel imports in Jan-Nov. Volumes may decline post-safeguard implementation

• China enjoys lion's share, but licences seen expiring
  
  
• Vietnam sees decline amid dumping investigation
  
  
• India set to end calendar 2024 as net steel importer?
  
  

Morning Brief: India's struggles with mounting steel imports continued through the year. Volumes over January-November, 2024 rose a significant 25% to 8.56 million tonnes (mnt) against 6.85 mnt recorded in the same 11 months in 2023. So far, India has been a net importer of steel, because exports in these 11MCY'24 were lower at 7.09 mnt.

By the look of things, India may end calendar 2024 as a net steel importer.

Country-wise imports (excluding stainless steel)

China hogged the lion's share of 30% in the total 8.56 mnt imports pie with 2.64 mnt in January-November, 2024. South Korea was a close second with 2.59 mnt. Japan followed with 1.63 mnt. Vietnam, despite seeing a drastic 90% m-o-m decline in November, saw total volumes in January-November at a healthy nearly 0.70 mnt.

Factors that impacted steel imports in 11MCY'24

Volumes from China increase ahead of licence expiry: Volumes from China increased as Bureau of Indian Standards (BIS) licences of mills/exporters there were about to expire. They wanted to make the most of the permits before their expiry. Currently, it seems, there are no active offers from Chinese mills in the Indian market, thanks to the above-mentioned red-tape. The BIS licence of China's Bengang Steel reportedly expired in early November. That of Baosteel Zhangjiang is slated to expire by end-January. However, Jiangyin Xing Cheng Special Steel Works has the leeway to export till October 2026 but its trade volume with India is negligible. That apart, no other Chinese mill is currently holding a valid BIS permit to export to India, it is learnt.

Vietnam's volumes plunge in Nov but steady through year: Export volumes from Vietnam, on the other hand, as already mentioned above, plunged 90% m-o-m in November although the country has been quite consistently dumping steel into India through the year. The recent decline could be a spin-off of two factors.

1) One is the non-renewal of expired BIS licences.

2) The anti-dumping investigations initiated by the Indian government against Vietnam around August this year.

However, it may be recalled, India had renewed the long-stuck BIS licence of Vietnamese steel major Formosa Ha Tinh in the first half of May, this year, which had led to a spurt in imports from July. Renewal of these BIS certifications/licences had/have been held back by the Indian government since April-May of 2023, in a bid to lower cheap imports inroads.

Japan eyes exports amid myriad challenges: Imports from Japan increased because of a few reasons.

1) Some cargoes were booked from Nippon Steel for AM/NS India, BigMint learnt.

2) However, overall, Japan too, like Vietnam, has been rather consistently dumping steel into India taking advantage of its free trade agreements with the country.

3) That apart, Japan is seeing a decline in domestic consumption amid a lull in its construction sector amid labour shortages, rising materials costs and new work hour regulations.

4) Machinery and engineering exports have declined because of global drop in demand for the same amid inflation, wars, and related factors.

5) Japan's auto production decelerated post-the safety test scandal at Toyota's small car unit, supporting the case for increased exports.

Outlook

India is mulling a 25% safeguard duty on steel imports whose implementation may take a couple of months. Post-which, imports are likely to decline. Plus, the BIS licence expiries will also help to keep volumes limited. "Safeguard duties are temporary measures, typically imposed for six months to a year but enough to send a strong message across," Dr Aruna Sharma, Practitioner Development Economist and retired Secretary, Steel, Govt of India, told BigMint recently.