India’s steel industry is grappling with a widening trade deficit, highlighting a shift in the global steel market dynamics. The first quarter of fiscal year 2025 saw the trade deficit expand to ₹6,704 crore, a stark contrast to the ₹3,698 crore surplus recorded in the same period last year.
Export Challenges
The country’s steel exports have taken a significant hit, declining by 38% year-on-year to 1.3 million tonnes in Q1 FY25. Flat steel products, in particular, saw a sharp 40% drop to 1.096 million tonnes. Key European markets showed reduced demand:
- Italy: 46% decline in volume and value
- Spain: 56% volume drop and 61% value decrease
- Belgium: 6% volume reduction and 20% value decline
The UAE market also weakened, with a 49% fall in order volume and a 40% decrease in value.
Rising Imports
While exports faltered, steel imports surged, particularly from China and Japan:
- Chinese imports rose 40% in volume to 0.572 million tonnes, valued at $677 million
- Japanese shipments increased by 170% to 0.5 million tonnes, worth $435 million
Interestingly, Nepal emerged as a new player in India’s steel import market, albeit with small volumes.
Market Factors
Several factors contributed to this trade imbalance:
- Lukewarm downstream demand in India
- Rising inventories and weak demand in China
- Weak raw material offers for scrap
- Overall sluggishness in EU markets
The Steel Ministry report notes that hot rolled coil/strip was the most imported item, making up 37% of finished steel imports.
This shifting landscape presents both challenges and opportunities for India’s steel sector. As the industry navigates these changes, it will need to focus on enhancing competitiveness and exploring new markets to regain its trade balance.