The Indian government believes robust domestic steel demand will counterbalance the impact of the European Union’s stricter steel import quotas, set to begin in April, according to a Reuters report.
The European Commission announced on Tuesday that it plans to implement stricter import restrictions on steel starting next month.
This move is aimed at protecting the struggling European steel industry, which has been negatively impacted by a surge in steel imports.
The Commission’s decision comes amidst growing concerns about the state of the European steel sector and the challenges it faces due to increased competition from imported steel.
By tightening import restrictions, the Commission hopes to create a more level playing field for European steel producers and safeguard jobs in the industry.
However, the move could also lead to higher steel prices and potential trade tensions with steel-exporting countries.
Additionally, the European Union has made the decision to implement stricter import quotas, also referred to as safeguards.
These measures will restrict the quantity of steel that can be imported into the 27 member states without incurring tariffs.
This is aimed at protecting the domestic steel industry within the EU by limiting the influx of cheaper foreign steel.
Domestic demand to cushion EU impact
The report quoted an anonymous source as saying:
There will be some impact but our (India’s) domestic consumption is growing so fast that the industry should be able to absorb.
The EU has been concerned about India’s steel exports, as Europe represents a major market for Indian steel products.
This apprehension stemmed from potential disruptions to the European steel industry and the possibility of unfair trade practices.
India’s steel exports to the European Union have seen a significant surge in the current financial year.
During the first eleven months of the financial year, India shipped a total of 2.03 million metric tons of steel to the EU.
This figure represents a substantial portion, specifically 46%, of India’s total steel exports during that period.
This further showed that the EU has emerged as a major destination for Indian steel, highlighting the growing trade relationship between India and the European bloc in the steel sector.
Despite India’s significant crude steel production capabilities, the country’s steel exports have historically been dwarfed by the domestic demand.
This trend highlighted the substantial internal consumption within India, which ranks as the second-largest crude steel producer globally.
This imbalance between exports and domestic consumption underscores the robust demand for steel within India’s rapidly growing economy and infrastructure development.
India’s steel consumption for 2023-24 was 136 million metric tons, while exports totaled just 7.5 million metric tons for the same period.
No significant impact from US tariffs
According to the report, there is likely no impact from the US steel tariffs as exports to America from India remain insignificant.
The report also acknowledged that while Chinese steel exports to the US were relatively small, there was less worry about the diversion of steel flows towards India.
Despite this, it emphasised that China continued to be the primary concern regarding steel trade and its potential impact on global markets.
India remained a net importer of steel during the first ten months of the current financial year (April-January), as it imported record amounts of steel from China, South Korea, and Japan.
In an effort to reduce imports, India had last week proposed a 200-day safeguard duty, which would place a 12% tax on certain steel products.
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