Is China’s steel industry on the brink of a major crisis?

By Metal miner

China’s direct dumping of steel in foreign markets and indirect dumping through proxy countries are finally under the global lens. According to Malaysia’s Ministry of Commerce, the country recently launched an investigation to determine whether or not to impose anti-dumping duties on rolled iron or non-alloy steel products imported from China, as well as India, Japan and South Korea.

Meanwhile, India has also initiated an anti-dumping investigation on imports of hot rolled flat products from Vietnam. The move comes after complaints that these products were being sold at low prices, adversely affecting the local steel industry. That reported by MetalMiner In the past, Indian steelmakers have for some time expressed concern about cheap imports from China being routed through Vietnam under the India-ASEAN free trade agreement.

The main problem is that the flood of cheap steel is driving down domestic steel prices.

Doubts remain about China’s steel industry

China is under the microscope for other reasons as well. In fact, the world’s largest steel producer has recently grown alarm on the country’s ongoing crisis, predicting a deeper industry downturn even at those major events of 2008 and 2015. China’s Baowu Steel Group Chairman Hu Wangming told employees at the company’s biannual meeting that the conditions in the country are like a “harsh winter. ” which could get longer and colder and even more difficult.

China’s steel industry suffered severe downturns during the global financial crisis in 2008-2009 and again in 2015-2016. In both cases, the country managed to mitigate the crises through substantial stimulus measures. However, such a solution seems less likely under the current leadership of Chinese President Xi Jinping. Meanwhile, Hu’s direct message is likely to alarm competitors in Asia, Europe and North America as they grapple with a new surge in Chinese exports and push for trade measures in response.

Analysts now expect shipments from China to reach around 100 million tonnes this year as Chinese producers try to counter a slowdown in their domestic market. This would be the highest export level since 2016.

India’s anti-dumping probe against Vietnam

The Indian government’s anti-dumping investigation came after Indian Steel Association (ISA), representing domestic producers such as JSW Steel and ArcelorMittal Nippon Steel India, filed a request to investigate imports of hot-rolled flat products of alloy or non-alloy steel from Vietnam.

According to an August 14 notice issued by the Directorate General of Trade Remedies (DGTR) of the Ministry of Commerce, there is sufficient evidence to suggest that these products are indeed being dumped on the Indian market, thus posing a significant threat to the local steel industry.

Indian steel industry becomes net importer

The probe includes hot-rolled flat products of alloy or non-alloy steel, unplated, unplated or coated, with a thickness of up to 25 mm and a width of up to 2100 mm. The investigation period covers January 1, 2023 to March 31, 2024. Meanwhile, Indian steelmakers continue to invest billions in expanding their capacity. They also continue to express concern that cheap imports could hurt cash flows and in turn slow down their expansion plans.

A CRISIL report in June highlighted that India has become a net importer of steel in fiscal 2024, posting a global steel trade deficit of 1.1 million tonnes. This represents a dramatic change from the country’s status as a net exporter since fiscal 2017. The report also noted that while China was the largest exporter, South Korea and Japan continued to export substantial volumes to India . In particular, Vietnam has emerged as a key exporter, with shipments to India increasing by 130% year-on-year.

Malaysian Steel Industry Probe

Surprisingly, India, South Korea and Japan, along with China, are currently at the receiving end of a similar investigation by the Malaysian government. According to Malaysia’s Ministry of Commerce, the investigation began after a local manufacturer filed a petition on July 15.

The producer alleged that products of rolled iron or non-alloy steel with a width of at least 600 millimeters and coated with tin were being sold below domestic prices in China, India, Japan and South Korea. They also claimed that these imports have increased significantly, hurting the local industry.

The ministry plans to issue a preliminary finding within 120 days of the investigation, although it did not specify an exact date. If the investigation supports the petition, the Ministry can impose a temporary anti-dumping duty to protect the domestic industry.

By Sohrab Darabshaw

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