Rising Imports From China, Russia Hurting Indian Steelmakers

　　Indiais among the many countries bearing the brunt of cheap steel imports from China- which is facing demand recession - and Russia and Ukraine, where majorcurrency devaluation remains export-supportive. However, India, which must growsteel-making capacity to take care of future demand, can ill-afford largeimports hurting domestic prices. The steel ministry's Joint Plant Committeereports imports during the April-February period took a leap of 67.3 per centto 8.38 million tonnes (mt) when exports were down 11.2 per cent to 5.40 mt.This should be a wake-up call for the government to put a wall against dumping.The ridiculousness of the situation is underlined by JSW Steel commercialdirector Jayant Acharya, when he says: "Some secondary steel producershave made production cuts to venture into trading by importing steel from Chinaand other countries." The market is getting deluged by imports when Indiansteel consumption grew by a measly 0.6 per cent to 73.9 mt in 2013-14 and inthe current financial year till February by three per cent to 69.21 mt. Allthis while, domestic industry constituents have been commissioning newcapacity.

　　The import threat is not to disappear soon. Flat demand and price falls led toworld steel capacity use falling to 76.4 per cent in 2014 from 78.4 per cent inthe previous year. China, which accounts for half the global production, isfeeling increasing heat in the domestic market, forcing it to ship as much aspossible in the world market. At the same time, steel groups in Russia andUkraine are seeing their profits grow almost entirely on account ofdollar-denominated exports. In the past 14 months, the Russian rouble andUkrainian hryvnia have lost considerable value. While weak currencies remainthe bane of the economies and people of the two former constituents of SovietUnion, devaluation has made local steel mills world-beaters. As balance sheetsof most steel companies in Russia and Ukraine will show, their profitability isback to the pre-global financial crisis of 2008-09, if not more. This hasbecome possible as the mills in Russia and Ukraine are paying most of theircosts from wages to energy to transportation and logistics in their respectivecurrencies but their income from exports is in the dollar and euro.