Posted on 23 Jul 2024
India’s Economic Survey 2023-24 notes that the weak performance of China's real estate sector since 2021 has caused significant overcapacity in its steel industry. This in turn has led to a collapse in global steel prices, Kallanish observes.
This overcapacity and subsequent rise in Chinese exports is putting significant pressure on steel producers in various countries including India, Vietnam, Brazil and others, according to the survey’s section regarding the Chinese manufacturing juggernaut and the threat it poses to emerging markets and developing economies (EMDEs)
“…the poor performance of China’s property sector since 2021 created significant overcapacity leading to a collapse in global steel prices, which now puts significant pressure on producers in India, Vietnam, Brazil, and other countries,” it said.
“Estimates show that China’s steel product exports are surging again—by 27% so far in 2024—after 35% growth last year,” it added.
The survey also highlighted the importance of green steel in a global context. “As the world moves towards a low-carbon economy, green steel is poised to play a pivotal role in reshaping the future of the steel industry,” it said.
India’s steel sector accounts for 12% of India’s greenhouse gas emissions with an emissions intensity of 2.5 tonnes of CO2 per tonne of crude steel compared to the global average of 1.9 tonnes of CO2 per tonne of crude steel.
India’s Union Finance Minister, Nirmala Sitharaman tabled the Economic Survey 2023-24 in parliament on 22 July. The survey is a comprehensive overview of India’s economic conditions and challenges aimed at informing policymakers, business leaders, the public and other stakeholders. It was presented ahead of the Union Budget which will be held on Tuesday, 23 July.
The survey also noted India’s recent net steel importer status. India turned into a net steel importer in the fiscal year ending on March 2024 (FY24), after being a net exporter of finished steel over the last ten years. It turned into a net importer due to price differentials between international and domestic prices of finished steel.
Moreover, India’s import dependence on coking coal, which is considered as an essential raw material for steel production, increased from 56.1 million tonnes in FY23 to 58.1 mt in FY24, as per the survey.
Indian hot rolled coil imports rose 42.95% month-on-month to 208,469 tonnes in June, according to cybex data. It continued to be a net importer in June, as Indian HRC exports slumped 25.6% month-on-month to 48,719t (see Kallanish passim).
The survey also noted the commercial unavailability of several technologies required for the global transition towards achieving net zero emissions as a challenge. Some examples included hydrogen-fuelled steel or cement, steel and aluminium production using carbon capture, utilization, and storage (CCUS) and more.
It recommended enhancing international cooperation in research and development, especially in key areas such as distributed renewable energy, offshore wind, geothermal and others.
Source:Kallanish
