ArcelorMittal Nippon Steel India warns of major production cuts and delays due to India’s import restrictions on met coke. The joint venture may shut down its operations or cut production significantly due to local suppliers’ inability to meet quality standards. Concerns are rising about the impact of these restrictions on the steel industry’s future amid ongoing expansion plans.
ArcelorMittal’s joint venture in India, ArcelorMittal Nippon Steel India, has stated it may need to significantly reduce steel production and postpone expansion plans due to import restrictions on low-ash metallurgical coke (met coke) imposed by the Indian government. These restrictions were aimed at supporting the domestic coke industry but have left local suppliers unable to meet the quality standards required by the joint venture.
In a letter to Commerce Minister Piyush Goyal, CEO Dilip Oommen warned that if the situation does not improve, operations could be severely affected. He indicated the possibility of shutting down blast furnace operations by June 2025 or reducing production from April 2025. The letter, dated February 19, reflects deep concerns about the impact of Indian policy on foreign steelmakers.
Oommen’s letter highlights the growing panic among steel producers due to the restrictions, with domestic competitors like JSW Steel and Tata Steel also expressing opposition to the curbs. Despite a notable increase in met coke imports over the last four years, the government has restricted total imports to 1.4 million metric tons in the first half of the year to encourage local sourcing, despite ongoing quality issues.
The joint venture holds 5% of India’s steel market share within a sector that has a capacity of 200 million metric tons annually. ArcelorMittal-Nippon is in the midst of a $9 billion investment that began in 2021, aiming to increase its steel production capacity in India to 40 million metric tons by 2035. However, the current situation may delay the commissioning of new facilities.
The Indian steel market is already facing challenges with elevated steel imports and declining domestic prices, impacting profitability and potentially leading to job cuts. JSW Steel criticized the import restrictions as counterproductive. The quotas came after assessments indicated a need to safeguard local met coke producers from rising import levels, with significant suppliers including China, Japan, and Poland.
ArcelorMittal’s joint venture in India faces substantial challenges due to new import restrictions on met coke, which threaten significant production cuts and delays in expansion plans. Local suppliers’ inability to meet quality requirements compounds these issues. The joint venture has warned of potential shutdowns by mid-2025 while calling for the government to reconsider its import strategies. These developments underscore the tension between domestic production mandates and the operational needs of foreign steel companies amid a changing market landscape.
Original Source: www.livemint.com
