Imports of finished flats cover 97% of total shipments
Scrap imports rise marginally amid increased sourcing of semis
Rise in domestic production puts a brake on surging imports
Morning Brief: India's imports of finished stainless steel products reached around 1.03 million tonnes (mnt) in financial year 2023-2024 (FY'24), a decrease of 10% y-o-y compared with 1.15 mnt in FY'23, as per latest BigMint data. The share of finished flat products in total imports was an overwhelming 97% at over 1 mnt, while imports of finished longs were around 27,000 t.
Despite the y-o-y decline, imports were at a high level similar to FY'23. Historically an exporter of stainless steel until FY'19, India has shifted to become a net importer. The share of imports in India's stainless steel consumption increased from around 17% in FY'18 to nearly 30% in FY'23. Imports of stainless steel flats have surged from around 0.5 mnt in FY'19 to over 1 mnt in FY'23.
While the existing customs duty on imports of finished stainless steel was reduced to 7.5% in Budget 2021-2022, the 18.75% CVD on subsidised imports from China was revoked in Budget 2022-2023. There are yet no trade remedial measures in place to counter imports from FTA countries.
Series-wise imports
Data shows that imports of 300-series stainless steel products stood at over 385,000 t, a decrease of around 18% y-o-y, while imports of other series were over 400,000 t. Incidentally, imports of 400 series products, basically martensitic stainless steels amenable to further heat hardening, increased sharply y-o-y to over 210,000 t even as inbound shipments of 200 series products declined by 15% y-o-y to around 34,000 t.
Country-wise shipments
China was by far the top importer to India at over 665,000 t in FY'24 which constituted over 64% of total imports. The other top import destinations were South Korea, Vietnam and Japan.
However, shipments from China fell by 9% y-o-y. Notably, imports from Indonesia decreased sharply by 65% and from Taiwan by nearly 70% on the year, which were partly filled by higher imports from Vietnam and South Korea.
Why stainless steel imports fell in FY'24?
Higher domestic production: BigMint data shows that India's finished stainless steel production increased by an impressive 21% y-o-y to 3.32 mnt in FY'24 from 2.74 mnt in the preceding fiscal. Production of flats edged up by 22% y-o-y to 2.31 mnt. This was a key factor in reining in flat product imports to an extent, which edged down by 10% y-o-y. The share of imports in the country's apparent consumption fell marginally y-o-y to around 28% in FY'24.
Of course, the high level of imports can be justified by the rise in domestic stainless steel consumption. However, consumption in FY'24 did not surge y-o-y as strongly as the 13% growth witnessed in carbon steel demand, remaining at similar or slightly lower levels compared with FY'23. The share of imports in apparent consumption fell marginally y-o-y in FY'24 to around 28%, as per estimates.
Increased imports of semis: Inbound shipments of semi-finished stainless steel products, mainly slabs, jumped 60% y-o-y to over 515,000 t in FY'24 compared with around 323,000 t in the previous fiscal year. This was a strategy adopted by the domestic mills to control costs, increase export competitiveness and counter global commodity volatility, especially for scrap, nickel, and ferroalloys, while increasing flats output with imported slabs for higher domestic consumption and exports. This not just impacted stainless steel scrap imports (which rose by just 3% y-o-y despite domestic production rising over 20%) but also played a role in curbing imports of finished products.
Drop in shipments from Indonesia, China: Amid widespread concerns of rapid inflow of subsidised stainless steel from especially ASEAN countries and those that enjoy FTA benefits, imports from Indonesia fell sharply y-o-y, while imports from China, too, drifted lower. A high level of imports has impacted domestic capacity utilisation (typically below 60%) and affected the domestic MSME sector of mainly IF-based producers and re-rollers. However, imports remained at a high level, especially from China, due to highly competitive prices compared with domestic flat products of stainless steel.
Outlook
High industrial capacity in China and some of the ASEAN countries amid subdued demand currently has led to steady imports into India which, in the absence of trade remedial measures, are difficult to restrict especially because India's consumption trend remains quite strong. However, rapid domestic capacity enhancement, particularly by major players, is an emerging counterweight to imports.
Geopolitical crises have led to trade redirection, rise in fright rates and logistical problems which may weigh on scrap imports going forward. However, cost optimisation by domestic mills may lead to higher imports of semi-finished products.
