How To Avoid A Dumping Flood

Trump's tariff war with China will also needle some Indian manufacturers

- N. Madhavan

The most recent dream run for poly vinyl chloride (PVC) and steel manufacturers in India, ironically, coincided with the pandemic. Global supply lines were disrupted, imports dropped, and domestic prices rose sharply. The price of hot rolled steel coil touched a peak of ₹67,000 per tonne while that of suspension PVC—the most consumed variety used for making pipes and wires—was ₹1,85,000 per tonne. PVC players such as Reliance, Chemplast Sanmar and Finolex Industries and steel majors, Tata Steel and JSW Steel, raked in large profits, paid off debts and built strong cash reserves.

But the good times lasted just a couple of years. In 2022, China embraced its 'zero covid policy' and shut down large swathes of its country. Soon, 'predatorily priced' Chinese imports—where the landed cost of imports is either lower than the cost of production or locally sold price—started flooding the Indian market. Prices tanked. Suspension PVC imports from China is set to jump six-fold between 2021-22 and 2024-25 (see chart). Not surprisingly, PVC prices have since crashed to ₹80,500 per tonne levels.

The steel industry also faces a similar scenario. Chinese imports have almost quadrupled in the same period (see chart). Add to this, the imports routed through countries such as Vietnam. After a gap of five years, India became a net importer of steel in 2023-24. That gap is set to widen significantly this year. Domestic steel prices of hot rolled coils (HR coils), a steel product, have fallen to ₹46,000 per tonne currently; Tata Steel's profits are down and in the last one year, the steel maker's shares have barely moved, ending 20 January at ₹131.47 a piece.