New Delhi is set to intensely monitor steel imports for the next two months before making a decision on whether to implement additional measures to curb the increasing influx of shipments. This review comes as India, the world's second-largest crude steel producer, continued to be a net importer of finished steel for the second consecutive month in May.
Surge in Imports Despite Existing Protections
Finished steel imports reached 0.7 million metric tonnes in May, surpassing the average monthly imports recorded over the preceding six months. Conversely, finished steel exports fell to 0.5 million metric tonnes, below their six-month average, highlighting sustained pressure on domestic manufacturers.
Despite the government's efforts to safeguard local producers, the existing measures have shown limited impact. In December, New Delhi imposed a three-year safeguard duty on specific steel products to counter low-priced imports, predominantly from China. However, Chinese finished steel shipments to India more than doubled in April compared to the previous year, reaching their highest level in at least two years.
Reasons Behind the Import Growth
Surprisingly, the surge in India's steel imports is not primarily driven by domestic construction or automobile demand. Instead, it is largely fueled by a significant increase in orders for steel pipes destined for pipeline projects across West Asia. Countries like Saudi Arabia are heavily investing in oil, gas, and water infrastructure to bolster energy security and expand desalination and distribution networks.
Indian pipe manufacturers, including prominent players like Welspun Corp and Jindal Saw, are capitalizing on this robust demand, anticipating strong growth opportunities in West Asia and North America. However, fulfilling these substantial export orders necessitates specialized, high-grade steel, much of which is currently imported from countries such as China, Japan, and South Korea.
According to commodity intelligence firm BigMint, some critical steel grades required for oil and gas pipelines are either not manufactured domestically or have yet to secure the necessary certifications from end-users. Consequently, pipe makers rely on imports, often utilizing the Advance Authorisation Scheme, which permits duty-free imports for products intended for export. Most of these shipments arrive via India's western coast and are ultimately used in overseas projects, particularly in West Asia.
Policy Balancing Act
In a separate development, the steel ministry has reportedly urged the finance ministry to withdraw the provisional anti-dumping duty on low-ash metallurgical coke, a crucial raw material for steelmaking. This request stems from concerns over insufficient domestic availability and elevated prices, which could inflate production costs for steel manufacturers.
These developments underscore the complex balancing act faced by policymakers: protecting domestic steelmakers from cheap imports while ensuring adequate raw material supplies and managing input costs for the industry. Officials are currently assessing whether existing measures are sufficient or if more stringent actions are required, though no decisions have been made regarding the nature of any future interventions, such as anti-dumping duties or other trade remedies.
Data from Elara Securities indicates that India's finished steel imports surged by 45% year-on-year to 1.37 million tonnes in the first two months of FY27, outpacing the 27.4% increase in exports. Import growth accelerated from 31% in April to 63% in May, with analysts expecting elevated import levels as strong export inquiries continue to support Indian pipe makers. This trend highlights an increasingly bifurcated steel sector, where pipe manufacturers benefit from a global infrastructure spending boom even as India remains a net importer of finished steel.