NEW DELHI, July 17 (Reuters) – Indian traders have been buying Chinese steel at a deep discount, officials and industry analysts have said, spooking Indian producers ahead of a seasonal rebound in domestic demand.
Attracted by discounts of $30 to $50 per tonne on hot and cold rolled products, Indian buyers are signing a series of import agreements, they add. Domestic industrial activity is expected to pick up over the next two months after the monsoon rains subside.
Indian traders are buying the grades used in automobiles and construction, the main drivers of domestic demand for steel, officials and analysts said.
“The Chinese are offering discounts because other markets are not doing well and we are seeing good growth in the Indian auto and construction sectors,” said Snehdeep Bohra, India director at Fitch Ratings.
Traders near port cities in the eastern state of Odisha and the western state of Gujarat find it cheaper to import steel from China than to spend on local freight, a senior executive at a major Indian steel company said on condition of anonymity.
Cheaper steel purchases from China could further hurt the market share of Indian suppliers, already hurt by imports of Chinese electrical steel used in power infrastructure and electric motors, officials and industry analysts said.
Senior officials at five major Indian steel mills, some of whom did not want to be named because they were not authorized to speak to the media, said Chinese imports were a threat.
India, the world’s second-biggest crude steel producer, imported 228,000 metric tons of steel from China during the first two months of the fiscal year that began in April, the highest level in six years.
In April-May, Indian imports of Chinese steel products such as plates and pipes used as construction material hit a three-year high.
During April-May, about 35% of China’s steel imports were cold-rolled steel products, followed by tubes.
About 68% of China’s cold-rolled steel cargoes landed at Mundra port, owned and operated by Gujarat’s Adani port.
China’s stainless steel imports reached a three-year high of 107,000 metric tons in the same period.
However, India has decided not to impose a countervailing duty on select steel imports from China to protect end users, a government source told Reuters last week.
Reporting by Neha Arora; Additional reporting by Amy Lv in Beijing; Edited by Mayank Bhardwaj and Himani Sarkar
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