Vietnam's leading steel producer, Formosa Ha Tinh, has received quality certification from India's Bureau of Indian Standards (BIS), allowing it to resume steel exports to the Indian market. This development comes after a temporary halt in steel shipments from Vietnam due to the lack of mandatory BIS certification required for exporters.
Following the certification, Indian importers have already booked around 40,000 metric tons of hot-rolled coil (HRC) from Formosa Ha Tinh at approximately $595 per metric ton on a cost and freight (CFR) basis. This price is estimated to be $36 per metric ton cheaper than the domestic trade price of HRC in India.
The resumption of steel imports from Vietnam has reignited concerns within India's domestic steel industry regarding the potential impact of cheaper imports on their growth and profitability. Industry leaders have expressed apprehensions that unfairly priced imports could derail the industry's investments in creating new capacity.
Domestic Industry Voices Concerns
Tata Steel CEO T.V. Narendran stated, "The volume of imports is not that much of a concern, but it does act as a dampener on the domestic price. If it is unfairly-priced imports, we should stop it. Because at the end of the day, if those steel companies are selling steel in India at prices where they are not making money, why should it derail an industry that is investing tens of thousands of crores in creating new capacity?
"Ranjan Dhar, a senior executive at ArcelorMittal Nippon Steel (AM/NS) India, warned that Formosa Ha Tinh's license could potentially exacerbate steel dumping in the Indian market. Analysts at BigMint, a market intelligence firm, also highlighted the worrisome factor for Indian mills, as other mills from free trade agreement (FTA) countries and China may also seek renewal of their licenses to export to India.
Government Stance and Industry Adaptation
The Indian government has maintained its stance on the issue, stating that import volumes remain within tolerable thresholds, and they continue to closely monitor the situation. However, the industry is advocating for safeguard measures, including the imposition of import tariffs, particularly from countries like China.
Additionally, the industry is adapting to the European Union's Carbon Border Adjustment Mechanism (CBAM), which is expected to impact India's steel exports to key European destinations. Efforts are also underway to explore various green steel production methods, aligning with the government's target of achieving net-zero emissions by 2070.
As the Indian steel industry navigates these challenges, the balance between protecting domestic interests and maintaining a competitive market remains a delicate one, with implications for both producers and consumers alike.
