Following the well documented decline in Chinese steel demand growth, there have been concerns over whether Chinese steel makers can find new markets for their products and the potential consequences of a huge amount of excess steel making its way on to the global market. Fortunately we have seen recovering demand in the US and EU partially mitigate the declines seen in China and provide markets for Chinese steel but the increasing likelihood of anti-dumping measures and other initiatives to protect the domestic steel industries in these regions could restrict the amount of steel that finds its way into these markets. There could be another country that has the potential to absorb some of this surplus steel, however.
After Mohdi’s BJP party came to power last year, the Indian economy has seen substantial growth with a GDP increase of 7.5% in Q4 last year. This growth can also be seen in the country’s crude steel production. In 2014 production increased by 6.4%, a trend that has continued into this year with Q1 2015 production up some 9% year on year. The increase in demand for steel in India did not solely come from the increase in internal production. Imports rose by 28% during the year to 9.5 million tonnes. The largest contributors to this increase were hot rolled wide strip, up 28%; Wire rod, up more than 150%; and CR flat products, up 25%. Importantly the vast bulk of these increased imports came from China, with India accounting for nearly 1.9 million tonnes of extra Chinese tonnage last year with imports from the country more than doubling.
This trend has continued into this year with imports in January 2015 nearly doubling to 1.1 million tonnes with imports from China increasing by 145% to 362K tonnes. With the Indian economy showing no signs of slowing down so far this year, if imports from China continue at the current rate, India could account for another million tonnes of steel from the country by the end of 2015, thereby helping to take some pressure off the global steel industry and possibly provide an outlet for some Chinese steel makers.