Influx of Chinese steel likely to impact India’s near-term growth: JSW Steel

The inflow of steel imports from China is one of the key factors expected to impact India's near-term growth, JSW Steel's chief economist said Jan. 27.

"If Chinese material does not find their own outlets, they will flow to the markets they find more accessible," Mangesh Soman said at an industry event. "That is a threat we have to be aware of and guard against it and the government needs to look at it seriously."

Soman's comments come in the backdrop of India's Directorate General of Trade Remedies, an arm of the federal finance ministry, initiating a probe on cheaper steel imports.

S&P Global Commodity Insightsreported earlier, Dec. 20, that India launched a safeguard probe on imports of non-alloy and alloy steel flat products between October 2023 and September 2024, following a plea by major domestic steelmakers.

Market sources toldCommodity Insights that cheaper imports from China have negatively impacted domestic finished steel sales, dampening demand for raw materials like ferrous scrap.

Platts, part of Commodity Insights, assessed the price of domestic hot-rolled coil at Rupee 48,750/mt ex-works Mumbai ($564.08/mt) on Jan. 27. The price dropped to Rupee 46,500/mt ex-works Mumbai Sept. 26, 2024, the lowest level since November 2020.

Limiting factors for growth

Soman mentioned that the slowdown in capital expenditure ahead of the general elections in 2024 and the effects of deferred demand from the pandemic are key factors contributing to the country's sluggish growth in 2024.

"Public capex, which was the mainstay of growth (for India) for the last few years, fell this year due to elections and it has still not revived," Soman said.

India's gross domestic product growth is expected to decelerate to a four-year low of 6.4% in the financial year 2024-25 that ends March 31, according to the National Statistical Office's advance estimates released Jan. 7. The growth in the previous financial year stood at 8.2%. India's financial year runs from April to March.

Soman further added that India's medium-term growth rate will depend on the "behavior of capital expenditure cycle."