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Indian ferroalloy industries hurt by cheap imports from China

At a time when Indian ferro alloys producers have slowly expanded their installed capacity over the years to meet the expected rising demand from steel industry, cheap import from China is steadily grabbing the domestic market share.

Amid expectations of luring figure of steel production of 100 million tonnes by 2012-13, ferro alloys producers have continuously added the production capacity over the last several years. In the 2010-11 financial year alone, the industry added over 0.61 million tonnes to 4.65 million tonnes. Fortunately, the demand of the steel making ingredients has also increased.

But, according to the Indian Ferro Alloy Producers’ Association, the advantages of the demand are muted. Mr TS Sundaresan secretary general of IFAPA said that this is because of escalating import from China and thereby, an imminent reduction in the capacity utilization.

The latest IFAPA assessment said the capacity utilisation has declined to 62% in 2010-11 as compared to 65% last year. The overall installed capacity of the industry stood at 4.04 million tonnes last year.

Ferro alloys’ production in India has shot up to 2.87 million tonnes in 2010-11, as compared to 2.63 million tonnes in the previous year. Despite over 9 per cent rise in domestic production, the import surged to set the new record this year.

According to IFAPA, an overall imports of ferro alloys jumped by 21% to 218,401 tonnes for the financial year ending March 2011 as compared to 180,590 tonnes in the previous year. In the last five years, overall import of ferro alloys has risen by a staggering 72%.

Apparently, Chinese products are widely accepted by Indian steel makers due to competitive price. Since, the quality of imported goods is almost at par with the product of domestic origin, steel mills prefer the Chinese ferro alloys in order to keep higher margins. Mr Sundaresan said that rising import was a major cause of concern for the domestic ferro alloys industry.

He added that “Hence, we have recommended the government to raise import duty to 7.5% to protect the domestic industry from cheap imports.”