Written by Neha Arora
MANDI GOBINDGARH, India (Reuters) – India’s construction boom with gleaming high-rises and busy highways should have boosted domestic steel sales, but Jogindra Group’s mills in northern Punjab state are full of unsold supplies.
A flood of cheap Chinese steel has forced small Indian mills to scale back operations and consider job cuts, as the South Asian country joins a growing list of countries considering action to curb imports.
India, the world’s second-largest steel producer, turned into an exporter last fiscal year, sounding warnings in New Delhi about what a weak sector portends for the security of future infrastructure projects and industries that rely on the steel.
At small and medium-sized mills, which account for 41% of India’s total steel output and employ more than 1.5 million people, energy use has dropped by nearly a third in the past six months, managers of a dozen such manufacturers said in interviews.
In Mandi Gobindgarh, the “steel city” of Punjab, a group of mills cannot compete with Chinese imports that are often sold up to 10% below Indian offerings.
“If we cannot compete in the market, our industry will not be fully functional,” said Adarsh Garg, chairman and managing director of the Jogindra Group.
“We will be forced to lay off 10% to 15% of our workers here if this continues,” said Garg.
Despite offering discounts on its products, the company’s sales have fallen 30% to 35% in the past six months, forcing it to cut production by about a third, Garg said.
Raju John, director general of the Builders Association of India, said developers and engineering firms were attracted by the savings. Chinese steel sells for $25 to $50 a metric ton, which is cheaper and sometimes reaches $70.
Imports of finished steel from China have reached record levels this year, rising more than 30 percent, and include both hot-rolled steel used in construction and steel taken from the auto industry.
The influx of goods has affected domestic sales and low Chinese prices have also hurt Indian sales.
‘EVERYBODY BLEEDS’
China produces more steel than the rest of the world combined, and its trade in global markets has sparked widespread trade complaints.
That production, which is expected to continue through 2025, coincides with an increase in exports as China’s structural crisis has reduced demand in the domestic construction industry, overseas steel markets, and even in countries with strong domestic industries.
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