In the early second half of 2023, a slow trend has been observed in India’s Steel imports. However, from January to July 2023, India saw a significant surge in annual Steel imports, marking a 47% increase to reach 3.5 million tons compared to 2022’s 2.4 million tons. Notably, HRC Plate imports, comprising 1.3 million tons, represent nearly 46% of the total Steel imports.

During the current calendar year, Southeast Asian countries such as South Korea, Vietnam, Japan, and China emerged as India’s primary sources of Flat Steel imports. Notably, Chinese and Vietnamese Steel mills have been particularly affected by recent developments, as they face a substantial backlog in renewing their Bureau of Indian Standards (BIS) certifications or licenses from the Indian government, with these mills having awaited renewal since the April-May 2023 timeframe.

What Is a BIS Certificate?

BIS certification is an essential regulatory obligation for numerous imported goods within India. This certification serves as a quality guarantee and confirms that the product adheres to the safety and performance standards. Both imported and domestically produced items in India must adhere to the standards outlined by BIS, making it a vital mechanism for ensuring quality and safety, as mandated by the Indian government.

License Distribution & Renewal Woes

China currently possesses the highest number of BIS licences, totalling 85 licenses. Japan follows closely with 53 licences, while South Korea holds 45, and Vietnam maintains 22 licences. The situation for Chinese mills has taken a concerning turn, as 38 out of their 85 licenses have expired, and nearly 12 licences for Vietnamese mills have become inactive.

Current Offers

The HRC offers are below:
- Ex-NCR/Delhi: Rs. 58,000/ton
- Ex-Mumbai: Rs. 57,800/ton
- Ex-Ahmedabad: Rs. 58,300/ton
- Ex-Chennai: Rs. 59,500/ton
- Ex-Kolkata: Rs. 57,100/ton
- Ex-Hyderabad: Rs. 59,000/ton

License Renewal Delays Consequences

The consequences of the license renewal delay are becoming increasingly evident, as a decline in India’s Steel imports is expected starting from August to September. Many of these quality certifications and licenses, primarily issued for various Flat Products, have already expired in April-May.

If orders were placed before the certification expiry, they will proceed without any disruption. China’s exports to India in the first half of 2023 surged by 65%, reaching 0.46 million tons compared to 0.28 million tons during H1 2023. However, in August-September, a substantial portion of exports is expected to face disturbance.

Guidance Falters, Uncertainty Looms

The duration of this delay in renewing quality licenses remains uncertain as the Central government of India has not provided clear guidance. This situation comes as a relief for Indian mills, and the domestic Flat Steel market is anticipated to remain supported, with prices unlikely to fluctuate or drop. Indian Steel mills, especially those producing Flat Products (HRC and Plates) should seize this opportunity to prepare and maximize their production capacity for the peak demand season starting from October 2023 onwards.

OFB’s Insight

India’s Steel import landscape in 2023, marked by BIS license renewal delays and a subsequent surge in imports, underscores the industry’s adaptability. Indian Steel mills must now seize the opportunity to fortify their position in this dynamic market.