ArcelorMittal Nippon Steel India has warned of major production cuts and expansion delays due to import restrictions on met coke imposed by the Indian government. Local suppliers cannot meet quality requirements, prompting requests for additional imports from Poland and Japan. Challenges arising from the policy may significantly affect the company’s operations and the wider Indian steel industry amid a backdrop of increasing imports and lower domestic prices.
ArcelorMittal’s joint venture in India, ArcelorMittal Nippon Steel, has indicated significant challenges ahead, potentially requiring major reductions in steel production and delaying expansion plans due to recent import restrictions imposed by the Indian government on low-ash metallurgical coke. These limitations were enacted to support the domestic met coke industry and involve country-specific import quotas.
However, local suppliers have been unable to meet ArcelorMittal Nippon Steel India’s quality criteria for met coke. The company has formally requested increased allocations from Poland and Japan to maintain its operational continuity. In a letter to India’s Commerce Minister Piyush Goyal, CEO Dilip Oommen stated that the situation might compel the company to halt blast furnace operations by June 2025 or scale back production as soon as April 2025.
The correspondence highlights the anxiety surrounding India’s import policy, which is generating apprehension among foreign steel manufacturers about potential business disruptions. Notably, domestic rivals such as JSW Steel and Tata Steel have expressed their disapproval of the policy. Over the past four years, India’s imports of low-ash met coke have surged, prompting New Delhi to impose restrictions on imports capped at 1.4 million metric tons from January to June of this year.
There are indications that India may renew its met coke restrictions, further pressuring local steelmakers to source domestically, despite acknowledging domestic shortages and quality issues. ArcelorMittal Nippon holds a 5% market share in India’s steel sector, which boasts an annual production capacity of 200 million metric tons, and has a plant in Gujarat that may be heavily affected by the new met coke quotas.
Despite these challenges, ArcelorMittal-Nippon is engaged in a substantial expansion initiative with a total investment of $9 billion initiated in 2021, aimed at quadrupling steel production capacity in India to 40 million metric tons annually by 2035. However, potential delays in commissioning new blast furnaces have been acknowledged in the letter. The Indian steel industry is currently grappling with soaring imports of steel and declining domestic prices, adversely affecting profitability and leading to concerns about employment stability. JSW Steel has criticized the met coke import restrictions, suggesting they lack strategic justification, while import curbs were intended to protect domestic producers from rising foreign supply.
In summary, ArcelorMittal Nippon Steel India’s warning of significant production cuts and delays in expansion is in direct response to India’s recent import restrictions on met coke. The company faces challenges in sourcing adequate quality supplies domestically, raising concerns about its operational stability. The broader implications for the Indian steel industry, coupled with the ongoing investment expansion plans, highlight the critical intersection of policy and market dynamics in this sector.
Original Source: www.livemint.com
