NEW DELHI: The global steel industry faces turbulence as Chinese exports flood international markets, driving down prices. India’s steel companies are likely to witness a reduction in profit margins during Q3 FY25 due to these falling prices. Analysts attribute this to oversupply caused by weakened domestic demand in China and increased exports, which reached record levels in the first half of 2024.
China’s economic struggles, particularly in its real estate sector, have severely impacted steel consumption. New construction starts in China dropped by 24% in H1 2024, continuing a downward trend. This has forced Chinese producers to offload excess inventory internationally, with exports rising 24% year-on-year to 53 million tons in the first half of 2024. Projections indicate exports may surpass 110 million tons by year-end, marking the highest levels since 2015.
Implications for Indian Steelmakers
India, the world’s second-largest steel producer, is feeling the effects of cheap Chinese imports. Domestic steel prices have declined, squeezing margins for Indian companies despite steady demand. Furthermore, global trade protections, such as tariffs imposed by the U.S. and Europe on Chinese steel, are exacerbating challenges for Indian exporters.
Long-Term Concerns Amid Energy Transition
Adding to the complexity, the global push towards green steel production is straining traditional manufacturing models. The high costs of adopting renewable energy and eco-friendly technologies have created financial hurdles, further challenging profitability in the sector.
Indian steel companies must navigate these pressures by focusing on value-added products and exploring export opportunities in underserved markets. The global dynamics underscore the need for innovation and policy support to counteract external market shocks.
Web Team, C6N
