Top Indian steelmaker sounds alarm on flood of Chinese steel

[MUMBAI] The global steel industry isn't out of the woods even after prices bounced back this year, with supplies from China remaining a significant concern, according to Sajjan Jindal, chairman of JSW Steel Ltd, India's second-largest producer.

There's still huge overcapacity in China, Mr Jindal said in an interview after the company's annual general meeting in Mumbai.

"Our biggest concern is how China plays out and what they do as most of their businesses are run because of the highly subsidised policies of the government," he said.

Steel prices have rebounded this year after a run of five annual declines, alleviating pressure on mills' profit margins. While China has pledged to cut as much as 150 million metric tons of capacity by 2020, the nation continues to export its surplus amid the slowest growth in decades. That's prompted nations from India to the US to raise tariffs and anti-dumping measures.

"Every country in the world has been putting in anti-dumping duties and measures to protect them," Mr Jindal said on Tuesday, describing supply from China as a "big worry".

India should impose anti-dumping taxes on imports before the country's so-called floor-price regime expires next month, or the local industry will suffer again, he said.

India has raised import taxes, levied safeguard duties till 2018 and imposed floor prices on shipments to stem the inflow and help domestic players. Steel imports slid 31 per cent to 1.8 million tons in the three months through June from a year earlier, after rising to a record 11.7 million tons in the financial year ended March 31, according to official figures.

Steel rebar prices in China have rallied 35 per cent this year as local demand in the world's top producer proved to be more resilient than expected, with the government acting to bolster growth. The rebound followed a 31 per cent collapse in 2015 and 27 per cent retreat the year before.

The resurgence has helped mills even as China shipped out record volumes in the first half. Last week, South Korea's Posco reported a 47 per cent surge in quarterly profit, while Nucor Corp, the largest US producer, also reported higher profit as prices rose after the government took steps to stem the tide of imports. JSW Steel will report fiscal first-quarter earnings on Wednesday.

China's steel exports climbed to the second-highest level on record in June, expanding 23 per cent to 10.94 million tons, according to customs data. Exports in the first six months were 57.12 million tons, the seventh on-year increase in a row and the most ever for the period.

The government in China has faced increasing pressure from importing nations to deliver on its pledge to cut excess plants, including in steel.

Earlier this month, the European Union said it "expects China to make significant and verifiable net cuts in industrial overcapacity based on a clear timeline of commitments and an independent monitoring mechanism."

BLOOMBERG