ArcelorMittal-Nippon Warns of Severe Production Cuts Due to Import…

ArcelorMittal’s India joint venture warns of major cuts in steel production and potential delays in expansion due to strict import restrictions on met coke implemented by the Indian government. Local suppliers fail to meet quality standards, prompting calls for increased allocations from other countries. The letter details concerns about operational viability and the impact on future production plans.

ArcelorMittal’s joint venture in India has issued a warning regarding possible significant reductions in steel production due to import restrictions imposed by New Delhi on low-ash metallurgical coke, a crucial raw material. In December, the Indian government initiated these restrictions, which include country-specific quotas, to support the domestic coke industry.

Local providers have been unable to meet the stringent quality requirements of ArcelorMittal Nippon Steel India for met coke. Consequently, the firm has requested the government to allow for greater allocations from countries such as Poland and Japan to ensure operational continuity. CEO Dilip Oommen’s confidential correspondence to India’s Commerce Minister, Piyush Goyal, indicates that production could be curtailed as early as April 2025.

The letter, dated February 19, highlights the anxiety surrounding the import limitations of met coke, suggesting that foreign-owned steel manufacturers are apprehensive about impending operational challenges. Domestic competitors, including JSW Steel and Tata Steel, have expressed concerns over the potential impacts of these restrictions. Notably, India’s met coke imports have surged significantly over the past few years, with the government limiting overseas purchases to 1.4 million metric tons from January to June.

Furthermore, it has been reported that the Indian government may consider extending the met coke import curbs, aiming to motivate local steel mills to procure the commodity domestically despite persistent worries regarding quality and availability. ArcelorMittal-Nippon currently holds a 5% share of the Indian steel market, which has an estimated annual capacity of 200 million metric tons.

The company has initiated a significant expansion strategy involving a $9 billion investment, commenced in 2021, which aims to increase its steel production capacity in India to 40 million metric tons annually by 2035. However, current restrictions may lead to delays in the commissioning of new production facilities, contributing to a challenging environment for steel mills amidst rising imports and fluctuating local prices that affect profitability.

Overall, ArcelorMittal-Nippon’s warning reflects deep concern over India’s met coke import restrictions, which threaten to disrupt operations and halt expansion plans. Despite efforts to support the domestic industry, local suppliers are unable to meet quality standards, leading to calls for revised import policies. The situation remains precarious for steel producers as they confront mounting challenges from high import levels and declining prices.

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