India’s burgeoning construction boom, characterised by towering high-rises and expanding highways, was expected to fuel demand for domestic steel. However, steel mills, especially smaller ones, are grappling with unsold inventory as they face stiff competition from cheaper Chinese imports. The situation has led to operational cutbacks, with some mills contemplating job cuts, as India’s steel sector confronts challenges from rising imports.
India, once a net exporter of steel, has become a net importer in recent years, a shift that has raised alarms in New Delhi. The influx of inexpensive Chinese steel has particularly affected smaller mills, which account for 41% of India’s total steel production and employ over 1.5 million people. According to industry executives, the capacity utilisation of these mills has dropped by nearly 30% in the past six months due to the pressure from low-cost imports. Mandi Gobindgarh, often referred to as Punjab’s “steel city,” is at the epicentre of this struggle. Adarsh Garg, chairman of Jogindra Group, shared his concerns, stating that the flood of Chinese steel, sold at 10% lower prices, has forced his company to cut production by a third and lose 30% to 35% of its sales in the past six months. If this trend continues, he warns that layoffs of up to 15% of the workforce may be inevitable.
Chinese steel imports, which have surged by over 30% this year, are particularly detrimental to India’s smaller steelmakers. Prices of Chinese steel can be as much as $70 per metric ton cheaper than domestic products, making it an attractive option for developers and engineering firms. The Builders Association of India has confirmed that Chinese steel’s price advantage is drawing buyers away from Indian suppliers. While small mills bear the brunt, even large Indian producers like JSW Steel and Tata Steel are feeling the strain. The Indian Steel Association has raised concerns about the survival of the sector, pointing out that profit margins have dropped by as much as 91% in the current fiscal year, forcing many to delay expansion plans.
In response, the Indian government is considering curbing Chinese imports, a process that could take up to six months to implement. However, officials are mindful of the potential for mass layoffs in the steel sector, which employs over 2.5 million people across India. Ensuring the financial stability of domestic steelmakers is seen as crucial for maintaining the momentum of the country’s infrastructure development, which underpins its position as the world’s fastest-growing major economy. The crisis also extends to India’s export markets. Mills across the country, from Uttar Pradesh to Maharashtra, are reporting lost orders to cheaper Chinese products, leading to production cuts and job losses. The Indian steel industry is under immense pressure to find solutions, with many urging the government to act swiftly to protect domestic manufacturers and their workforce from the flood of cheap imports.
