China's Real Estate Stimulus Boosts Indian Steel Sector
Mumbai: Indian steelmakers are benefiting from China’s real estate stimulus package as Chinese steel prices rise above domestic levels for the first time in months.
ChinaReal EstateSteelIndian SteelStimulusReal EstateOct 21, 2024
According to analysts at BigMint, a market intelligence firm, hot-rolled coil (HRC) from China is now being quoted at a premium of ₹3,000 per tonne over domestic prices. HRC is currently trading at around ₹48,500 per tonne in Mumbai. This shift in pricing dynamics is primarily driven by improved sentiment in China following the government's stimulus for the real estate sector.
Previously, until September, Chinese steel was sold at a discount to domestic prices, which pushed local steelmakers to the brink and dragged prices to nearly four-year lows. However, this recent price hike could signal a potential reversal of the downward trend in Indian steel prices.
“The only thing preventing a price hike in the domestic market is an inventory build-up,” said Priyankar Biswas, associate director at BNP Paribas. He also cautioned that the price movement is currently sentiment-driven, and there is no significant increase in domestic steel consumption in China.
Not only could domestic prices improve, but export prices might also see a short-term boost for Indian steelmakers. India has been importing nearly 1 million tonnes of steel per month, compared to a domestic production of around 12 million tonnes. Imports have surged since last year, with India being one of the few major markets where steel demand is growing.
Data from BigMint shows that India’s steel imports in the first half of FY25 were approximately 5.1 million tonnes, a 54% increase from the same period last year. During this period, China overtook South Korea as the leading steel exporter to India, according to estimates from S&P.
Nearly half of the steel imports into India are from China, and Indian steelmakers have claimed that many of these imports are at predatory prices—meaning they are being dumped at prices lower than the cost of production. Following these complaints, the government is planning to impose a safeguard duty on steel imports to protect local industries.
The government is awaiting a formal duty proposal from the domestic industry. Once received, the Directorate General of Safeguards will investigate the matter and recommend whether any duty should be levied. Additionally, India has initiated an anti-dumping investigation into HRC imports from Vietnam after a complaint from domestic manufacturers.
“Theoretically, the landed cost of Chinese HRC imports to India has risen by approximately ₹3,000 per tonne following the price hike after recent stimulus announcements,” a BigMint spokesperson said. However, some Chinese traders are still quoting lower prices, which adds a layer of complexity to the situation.
Frequently Asked Questions
What is the current price difference between Chinese and Indian steel?
Chinese steel is currently being quoted at a premium of ₹3,000 per tonne over domestic Indian prices.
What has driven the increase in Chinese steel prices?
The increase in Chinese steel prices is primarily driven by improved sentiment in China following the government's stimulus for the real estate sector.
How have Indian steel prices been affected by Chinese imports?
Until September, Chinese steel was sold at a discount to domestic prices, which pushed Indian steel prices to nearly four-year lows.
What actions is the Indian government taking to protect the steel industry?
The Indian government is planning to impose a safeguard duty on steel imports to protect local industries, and has also initiated an anti-dumping investigation into HRC imports from Vietnam.
What is the current trend in Indian steel imports?
India’s steel imports in the first half of FY25 were approximately 5.1 million tonnes, a 54% increase from the same period last year, with nearly half of the imports coming from China.
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