Renegotiating melt-and-pour norms in FTAs to bring down imports: Steel Secy

Global and Indian experts expect Indian economy to grow 6-7 per cent in the medium term. Steel elasticity is said to be 1.2 times or so of the GDP growth. Hence, steel demand growth works out at 8 per cent or so. The Ministry of Steel is pushing for speciality steel projects and lesser carbon emissions. Post-Covid, infra projects have picked up pace and demand for steel is growing. The core sector industry witnessed a record growth of 8.9 per cent in June and steel constituted to 21 per cent of that growth.

So, we expect our demand outlook numbers to hold good. During the first four months of FY24, consumption of steel increased 10.8 per cent.

Steel is one of the many items that is subject to negotiations, and the Ministry of Commerce takes a comprehensive view after due consideration. In the interest of our domestic industry, we have been negotiating for melt and pour as the product-specific rules of origin, which will ensure that only those steel products melted and poured in the country with which we are having the trade agreement, will be allowed to be traded. This further means that the FTA benefits are available only to genuine manufacturers in other countries, rather than those who re-route their products to India.

Imports from China have shown some increase recently. However, domestic price of hot-rolled coils is generally stable, and the impact on Chinese imports seems to have been taken by the industry in their stride. In long products, the construction sector is facing price volatility due to the ongoing monsoon.

The steel sector across the globe is experiencing some slowdown in their domestic markets. A detailed analysis and monitoring with regard imports has been undertaken by us to see if there is any trend in imports that needs attention. Sharp increase [in imports] with countries with large trade imbalance will be a matter of concern, and we are monitoring this closely.

Steel-consuming industries should take steps to capitalise on India’s inherent strength and not conveniently rely on imports.

The Carbon Border Adjustment Mechanism (CBAM) is a regulatory measure meant to avoid carbon leakage in the EU when they take action to fulfil climate commitments. And up to December 2025, CBAM is only a reporting mechanism.

Carbon-efficient steel exporters from India may not be impacted. The government is examining, the regulations based on which a coordinated response will be planned.

Our Ministry has formed 13 task forces for working out strategy for green steel production in the​ country or defining the roadmap for ‘green steel’. The task forces comprise experts and industry​ stakeholders. The industry is drawing its own plans to meet expectation and opportunities arising out of green steel. Major players such as SAIL, Tata, JSW, JSPL, and AMNS, have announced plans to either partially or fully use renewable energy in the short- to medium-term by 2030, thereby moving towards production of low emission steel.

India is committed to reduce its carbon footprint in the iron and steel sector by adopting energy efficient and environmentally friendly technologies. We hope to reduce carbon footprint by 30-40 per cent by 2030. Our emission intensity is 2.55 tonnes of CO2 emitted per tonne of crude steel produced while the global average is 1.85.

Tata Steel has carried out trials with hydrogen injection in blast furnace. Kalyani Steel is utilising solar power in their electric arc furnace. Tata Steel, JSPL, and JSW have also installed CO2 capture plants.

Diversification of coking coal supplies is an ongoing process. Coking coal constitutes 30 to 40 per cent of the total cost of production of steel. And almost 80 to 85 per cent of its requirement was being met from imports from a particular country, subjecting steel players to the vagaries of volatility in prices and availability.

Dependence on a particular source is down to 52 per cent in FY23, from around 70 per cent in FY22. The trend is expected to continue in the current year, too. The Ministry’s MoU with with Russian Federation on Cooperation regarding metallurgical coal benefited Indian steel-makers. Indian mills imported almost 4.5 million tonnes of coking coal in FY23 from Russia, against 1.5 million tonnes in FY22.

The MoU with Russia could [also] lead to reduction in input cost for steel mills due to the long-term commitment of supply of high-quality coking coal to India (up to 40MT till 2035). Coal producers from countries such as Indonesia, Canada, US, and New Zealand are increasingly tapping across the industry here. We also continue our discussions with Mongolian government with regard to acceptable quality of coal for the industry, and are trying to work out ways of overcoming infrastructure constraints.