Is China dumping its Barred Stainless Steel Products in India via Indonesia?

In September 2017, India had imposed a countervailing duty of 18.95% for five years on imports of stainless steel flat products from China in an attempt to protect the domestic stainless steel industry. However, it seems that there is the case of duty circumvention by China as the Chinese stainless steel companies are rerouting their products to India via Indonesia.

Over the past few years, Indonesia has observed installation of about 3 MnT stainless steel capacity majorly by the Chinese companies whereas Indonesia's total stainless steel consumption stands only at 150,000 tonnes. The Indian stainless steel industry is gripped with fear that the new capacity installed in Indonesia is primarily coming in from Chinese companies, whose aim is to continue dumping the product into India under the South Asian Free Trade Area (SAFTA).

This can be validated by the fact that in past one year there is a dramatic increase in India's imports of stainless steel products from Indonesia. According to provisional customs data, India's stainless steel imports from Indonesia has increased from 6,239 tonnes in 2017 to about 40,619 tonnes in 2018 whereas in case of China the same have plunged by about 48% in 2018 against previous year and stands to be around 115,168 tonnes.

The additional obstacle of FTA and high raw material costs

Another major challenge that Indian stainless steel industry is facing is from the duty-free imports from Japan and South Korea due to FTA (Free Trade Agreement) signed with both the countries. Out of India's total stainless steel imports, about 20% comes from South Korea and 14% from Japan. Thus, India's majority of stainless steel import comes from China, South Korea, Japan, and Indonesia.

Besides imports, India's domestic stainless steel sector is also suffering due to high raw material costs given the import duty of 2.5% on ferro-nickel. Since India does not produce ferro-nickel the pressure becomes very high on domestic industry, commented an industry expert.

India has a total stainless steel production capacity of 5.4 MnT which is underutilized. With an estimated consumption of 3.2 MnT per annum, India's capacity utilisation stands at around 70% which means about 30% installed capacity remains idle. The demand for stainless steel in India is set to grow in the coming future given the increased push by the government to various infrastructure projects such as railway wagons, coaches, and airports.