ArcelorMittal-Nippon Issues Warning on Steel Production Cuts in India

ArcelorMittal’s joint venture in India warns of possible significant steel production cuts and delays in expansion plans due to New Delhi’s met coke import restrictions. The company is unable to source sufficient quality met coke locally and seeks additional supplies from abroad. Concerns have been raised among foreign steelmakers and domestic competitors regarding the impact of these policies on steel production and local markets.

ArcelorMittal’s joint venture in India has indicated a potential need for significant reductions in steel production and delays in expansion plans due to the Indian government’s restrictions on importing low-ash metallurgical coke. This policy aims to support the domestic coke industry by imposing country-specific quotas on imports of this vital raw material.

The company’s correspondence, directed to India’s Commerce Minister Piyush Goyal, reveals concerns regarding the inability of local suppliers to meet quality standards for met coke. ArcelorMittal Nippon Steel India is seeking increased allocations from Poland and Japan to maintain operations.

According to CEO Dilip Oommen, the joint venture may have to halt blast furnace operations starting in June 2025 or cut back production as early as April 2025. He expressed the company’s apprehensions about an “uncertain period” ahead, as reflected in a confidential letter dated February 19, which was examined by Reuters.

The situation has intensified anxiety among foreign steelmakers, especially as domestic competitors like JSW Steel and Tata Steel have also raised objections to the import restrictions. Over the past four years, India’s imports of low-ash met coke have surged, leading to imposed limits that may restrict total overseas purchases to 1.4 million metric tons from January through June.

Reports suggest that India may further extend these restrictions to promote local sourcing, despite criticism concerning the adequacy and quality of domestic supply. ArcelorMittal-Nippon holds a 5% share of India’s steelmaking market, which possesses an annual capacity of 200 million metric tons, and it operates a plant in Gujarat that could face operational challenges due to these quotas.

The company had previously announced a $9 billion investment to enhance operations and intended to boost steel capacity fourfold to 40 million metric tons per year by 2035. However, they indicated that the commissioning of a new blast furnace might need to be postponed.

Indian steel mills are currently struggling under the pressure of record steel imports and declining local prices, which jeopardize profits and could result in job reductions. JSW Steel has criticized the met coke import curbs as lacking strategic justification, asserting that these measures stem from a desire to shield domestic producers from competitive pressures related to imports.

ArcelorMittal’s warnings highlight the serious implications of India’s import restrictions on met coke. The company faces potential output cuts and expansion delays due to local suppliers’ inability to meet quality standards. This predicament emphasizes the broader challenges within the Indian steel sector, including the risks posed by policy changes and market dynamics, which could adversely affect production, job stability, and future investments.

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