China's Steel Surplus Puts Pressure on Indian Steel Mills

India's construction industry, with its gleaming skyscrapers and multi-lane highways, should ideally boost domestic steel sales. However, the reality is different: unsold steel stocks are piling up in the factories of the Jogindra Group in the northern state of Punjab. The massive influx of cheap Chinese steel is forcing India's smaller steel mills to scale back production and consider potential layoffs. India, the world's second-largest steel producer after China, has turned into a net importer in the last financial year. This development is causing concern in New Delhi about the future security of infrastructure projects and steel-dependent industries. In the small and medium-sized plants, which account for 41% of India's total steel production and employ over 1.5 million people, utilization has drastically fallen by a third in the past six months, report executives from a dozen such producers. In Mandi Gobindgarh, Punjab's "Steel City," mills struggle with Chinese imports that are up to 10% cheaper than Indian offerings. "If we don't gain a competitive advantage, our plant doesn't operate at full capacity," explains Adarsh Garg of the Jogindra Group, seeing the need to reduce the workforce by 10% to 15% if the trend continues. Despite price concessions, the company has recorded a sales decline of 30% to 35% in the last six months, forcing it to cut production by a third. According to Raju John, the Director General of the Builders Association of India, developers and engineering firms are drawn to the cheaper Chinese offerings, which cost between 25 and 50 US dollars less per ton. Imports of finished steel from China reached an all-time high this year, increasing by more than 30% and comprising both hot-rolled steel for the construction sector and galvanized steel for the automotive industry. This development is burdening not only domestic sales but also Indian exports, which are under pressure abroad from China's price breakers.