India's stainless steel imports gain 8% in H1CY'24; long product imports up by 20%

• Finished longs category witnesses a significant 20% increase
  
  
• Imports from FTA countries account for 90% share
  
  
• Domestic mills under pressure to meet sales targets
  
  

In the first half of the calendar year 2024 (H1CY'24), India's stainless steel (SS) finished product imports soared to 502,810 tonnes (t), marking an 8% increase from the 467,635 t imported in H1CY'23. This surge emerges amid a complex interplay of domestic production challenges, international trade dynamics, and shifting demand patterns in the global market.

The rise in imports was particularly significant in the finished longs category, which witnessed a pronounced 20% increase, reaching approximately 15,000 t in H1CY'24. Conversely, finished flats, which dominate the import category, increased by 7% to 487,850 t. Although finished longs represent a small fraction (3%) of total finished imports, their notable growth underscores a shift in market preferences and supply dynamics.

A series-wise breakdown of SS imports reveals that while imports of the 300 series grew by 13% to 188,820 t, the 400 series saw a dramatic 251% increase, reaching 174,010 t. In contrast, imports of the 200 series grew modestly by 3% to 15,500 t.

India's SS longs production experienced a slight decline of 0.4%, totalling 498,000 t in H1CY'24 compared to 500,000 t the previous year. The sector encountered difficulties such as maintenance shutdowns at mills and weak domestic demand, which resulted in production cuts and lower capacity utilisation.

Additionally, the drop in scrap arrivals, which fell by 15% to 519,780 t from 610,210 t in H1CY'23, significantly strained domestic production. This decline in scrap, essential for manufacturing SS long products, was further intensified by decreased imports from Europe and the Middle East, driven by geopolitical tensions such as the Red Sea crisis.

Country-wise import scenario

A notable aspect of the import dynamics is the dramatic increase in SS imports from China and Vietnam. China became the top supplier, accounting for about 62% of all imports with 309,004 t, an 8% increase from the previous year. Vietnam's exports to India skyrocketed by 190%, reaching 67,181 t. This surge is largely attributed to severe dumping practices by these countries, which has put considerable pressure on India's domestic SS industry, particularly impacting micro, small, and medium enterprises (MSMEs).

Taiwan and China were the primary suppliers of SS finished long products, with Taiwan providing around 4,786 t and China 3,828 t in H1CY'24.

This influx of imports from Free Trade Agreement (FTA) countries, which now account for over 90% of the materials, underscores the challenges faced by Indian manufacturers in competing with subsidised imports.

To address these challenges, the Directorate General of Trade Remedies (DGTR) has investigated and recommended imposing up to 19% duties on specific SS grades to counteract dumping. However, the customs duty on finished SS was reduced to 7.5% in Budget 2021-2022, and the 18.75% countervailing duty (CVD) on subsidised imports from China was revoked in Budget 2022-2023. Currently, there are no trade remedial measures in place to address the surge from FTA countries.

Outlook

Looking ahead, the removal of the 2.5% duty on ferro-nickel, a crucial raw material for SS production, is expected to lower production costs for Indian manufacturers. As raw materials constitute about 70% of total sales costs, this policy change will likely support domestic production.

Additionally, expansions in crude steel production, particularly through blast furnaces, are set to reduce dependence on imports. For instance, Jindal Stainless plans to increase its crude steel capacity by 0.84 million tonnes (mnt) via blast furnaces, potentially boosting domestic production and reducing reliance on scrap.