An Analysis of the Impact of Imports of Steel from China on Indian Steel Industry

Abstract

Steel is a big indicator in a development of a nation, India has always been on the top ranks in steel production due to its rich iron ores in Orissa but today the steel industry in the world and India are in a crisis due to throat cut competition and wafer-thin margins. Since 2008 Indian steel industries are in pressure due to falling prices in steel and very dense competition to counter this the steel companies have tried to bring their cost down to match the pricing but to do this they borrowed huge amounts of debt to expand and use economies of scale with the building of new plants in United kingdom by tata steel, the opening of 3 more plants by SAIL but this has fuelled more problems than solutions. In this paper a deep research in the current scenario of steel industry particularly India has been carried to understand the connection between the overproduction of steel in china and the impact of it on steel prices and Indian companies’ profitability and debt. In this paper through use of correlations, time series analysis and regression it is inferred that the top 6 companies in India have been fuelling a lot of debt from 2009 to 2017 which is highly correlated with the overproduction in china there seems to be a relationship between lower profits and higher debts with rising production in china, so we have recommended in this paper to come up with new solutions as to who to reduce the overproduction in china rather than imposing just anti-dumping duties on steel from china, another way the steel industry in India can flourish is by integration of various steel producers to achieve economies of scale rather than borrowing more debt to increase their production.