Indian steel industry under pressure: Chinese imports shake small plants

The Indian construction industry is currently experiencing a boom with dazzling skyscrapers and multi-lane expressways. However, while these developments should actually boost domestic demand for steel, the plants of the Jogindra Group in northern Punjab are full of unsold stock. The reason for this is a flood of cheap steel from China, forcing smaller Indian steel mills to reduce their production and even consider job cuts. India, as the second-largest steel producer in the world, became a net importer in the past financial year, causing concern in New Delhi about the sustainability of infrastructure projects and steel-dependent industries. In small and medium-sized plants, which account for 41% of India's total steel production and employ over 1.5 million people, capacity utilization has fallen by almost a third in the last six months. The "steel city" of Mandi Gobindgarh in Punjab is unable to compete with Chinese imports, which are often up to 10% cheaper than domestic products. According to Adarsh Garg, Chairman and Managing Director of the Jogindra Group, up to 15% of the workforce could be laid off if conditions do not improve. Despite promotional discounts, the company’s sales have plummeted by 30% to 35% over the past six months, necessitating a production cut of nearly a third. Raju John, the Director General of the Builders Association of India, also reports that developers and engineering firms are being attracted by the savings. Chinese steel is sold at $25 to $50 cheaper per ton, sometimes even $70. Finished steel imports from China reached a record high this year, increasing by more than 30%. The price pressure from China has affected domestic sales as well as Indian exports. China's dominant steel production, which accounts for more than half of the world's production, brings numerous trade complaints on the global market due to its low-priced offerings. These developments, expected to persist until 2025, coupled with increased export volumes due to the crisis in China's real estate sector, are causing worldwide nervousness in steel-producing countries, even in markets with a robust local industry.