October 5, 2022
Posted by: Explore Middle East FZE

The Indian steel industry is one of the most promising steel industries in the world. It is the largest steel-producing and exporting economy in the world. China is a giant producer of steel that supplies more than half of the steel markets. Both industries have their production processes, quality assurances, and costs. As the steel demand is growing exponentially, both industries are trying their best to be the ultimate leader.

Chinese steel and Indian steel

7 major differences between Chinese steel and Indian steel

  • Steel Production

China has its own setup that allows the designing and manufacturing of products within a short time. The associated processes are also cut down, leading to maximum efficiency and lower costs. In India, the processes require a huge investment and capital. Furthermore, the infrastructure is not modern, so the production time with additional costs is more. This is one of the major reasons why Chinese steel is associated with a lower external investment as compared to Indian steel.

  • Quality

China is the largest producer in the market and keeps flooding the market with steel. Its higher production capacity means that the workers primarily focus on quantity over quality. In India, due to the use of conventional technology, steel is thoroughly tested and screened before it is sold. Chinese steel is prone to failure in harsh conditions as compared to Indian quality steel.

  • Labor cost

China and India both have similar populations. This allows them to have good access to labor. The labor in China is well organized and offers better efficiency than in India. It is thereby no surprise that China gives away 16% lower wages in comparison to India. The Indian steel industry suffers from inefficiencies and poor technical facilities that propel them to pay higher wages.

  • Price per kg

China has excellent facilities and infrastructure that allow them to produce steel at reasonable rates. Furthermore, the lower labor costs have allowed it to keep the rate of steel low in the market. Generally, the rate for Indian steel for kg starts between $0.89 to $1.2 per kg. The price for the same products in China is below $0.80 per kg. This gives it a monopoly over the market.

  • Strength

The exact difference of strength may differ from the type of steel specification. Generally, steel produced in India can handle more pressure and stress. The quality control measures employed by Indian steel producers make this possible. Chinese steel is prone to embrittlement or can collapse under extreme stress. All these factors have allowed international clients to slowly shift towards steel produced in India.

  • Oxidation and corrosion resistance

Chinese and Indian steel has excellent chemical composition. The superior chemical content allows it to be a viable choice in harsh environments where they are prone to rust. Indian steel, however, has a slight edge over Chinese steel in terms of its oxidative resistance. This makes it less likely to corrode over time than other steel grades.

  • Impact of excess capacity

Steel production in China has been growing exponentially since its establishment. Due to this, the country dumps steel in the market as it has more than necessary. The dumping of steel has led to huge losses and the cancellation of major tenders. The Indian steel industry doesn’t face issues due to excess capacity. This has allowed it to grow slowly and improve the economic conditions. At this pace, India is winning the confidence of international markets for its quality and durability.

Why Chinese are dumping steel at throwaway price?

China has a hold over the international steel market as it produces the highest amount of steel around the globe. Its rapid steel manufacturing processes and exponential growth have allowed it to produce more steel than its domestic demand. In simple words, China has more to sell than space to store. All this has made the Chinese sell steel to other countries at lower rates.

Several International countries have accused China of dumping on the steel market. They believe that China is selling at lower rates so that other countries cannot compete with them. They have taken action against China to prevent the export of their steel to their countries.

Furthermore, the lower cost of labor has also helped reduce the cost of Chinese steel. However, China is still exporting steel at a loss even after the availability of good raw materials and labor.
The issue of dumping steel is simply not technical but also political and ideological. International trade associations argue that this method of dumping steel results in massive oversupply and damages the discipline in global markets.

Future of Indian Steel and Iron Ore Companies and Why India is not able to perform full potential in Steel production

India is one of the important producers of steel and iron in the world. The country, however, faces several issues that limit its growth. One of the major reasons is that the industry requires large investments that are not possible for a developing country. The lower investments in technology and infrastructure have further resulted in lower productivity. Furthermore, the labor productivity in India is at 90-100 tonnes, which is the smallest in the world.

India has huge deposits of iron ore. However, the high-grade cooking coal required to smelt iron is limited. Several steel plants have to import coal from other countries. Apart from this, Indian steel companies are plagued by inefficiency in terms of management, labor relations, etc. This has caused low utilization rates of iron and steel in the industries.

Even at such a low per capita consumption rate, the demand for steel and metal keeps increasing day in and out. Slowly and steadily, the country can evolve and become one of the biggest manufacturers of steel and iron.

Properties and features of Indian Steel VS Chinese Steel

The steel produced in India is manufactured under the standards of IS 2062. Here, the appropriate chemistry is determined to ensure the steel is of the right quality. Companies in China are producing steel at a rapid rate which is not following the proper standards as Indian steel. The steel from China is prone to embrittlement and cracking under pressure, which is not the case with Indian steel. The lower production cost and better manufacturing infrastructure allow China to produce cheap steel. Indian steel may be priced slightly higher, but its quality and performance give it an edge over its competitors.

Current Status of Indian Steel and Chinese Steel in Class 10

Iron and steel is an important industry in India. In the years between 2014 to 2016, India was the third largest producer of steel crude. In 2019, India became the second largest steel producer after China. The industry produces around 82.68 million tonnes of finished steel with 9.7 million of cast iron.

China will continue to be a major player and contributor to the steel industry for the next decade. In India, the growth rate of steel in the last 15 years has been 7% per year. These features give it more elasticity and a better platform for steel production.

Which region of India has the highest and best steel industries?

West Bengal, Jharkhand, Odisha, and Chhattisgarh are the 4 states having the highest no of iron and steel plants. Odisha is the largest steel-producing state in the country. It has a capacity of over 18 million tonnes of steel production per year. The steel plants in Rourkela, Jharsuguda, Dhenkanal, and Kalinganagar produce nearly 12 million tonnes of steel per year.

Odisha also supplies iron ores to steel plants in Bokaro in Jharkhand and Jamshedpur. The steel plants at Durgapur in West Bengal also use the iron ore supplied from Odisha. Odisha has the highest iron ore reserve and is the largest exporter of this material from India. Odisha has become a hub for Indian iron and steel production taking advantage of the good transport and abundant raw materials.

Why is Chinese steel so cheap?
China is one of the largest steel manufacturers in the industry. They have expanded their production over the last 25 years. The growth of steel production over the past decades has increased the demand in domestic markets. However, the current slowdown and economic shutdowns have decreased steel demands in Chinese markets. Since the demand in domestic markets has reduced, China is left with more steel than it needs. Chinese steel is therefore sold in the world markets at cheap rates even though they may be at a loss. As a consequence of this, other countries are finding it extremely difficult to compete with Chinese steel.

China dismisses any claims that its steel is sold at a loss. They further state that this is done to curb overproduction. International countries believe that China is dumping steel to create a monopoly in the market. The cheap rate of steel makes them a viable choice when compared to quality steel from other countries. Further, it is also believed that China doesn’t follow quality certifications, and its steel is of lower quality.

What is the advantage of Indian Steel? 
India is slowly becoming a powerhouse in the steel industry as the economy continues to grow. The steel produced in India is of the highest quality as it has access to quality raw materials and labor. Indian steel is produced following all set standards, and quality checks are performed to ensure they are the best in the market. The cost of labor in India is lower due to its largest growing population. As per a survey, India’s labor cost is 92 cents compared to the $3.52 in China. The thriving sector has been backed by the Government, which gives them a better opportunity to scale up and compete in the market. Further, the steel industries in India have built-in connections with different international countries. India has signed several memorandums with other nations to build high-tech machines to produce steel efficiently. The steel manufactured in India has a big market in automobile, infrastructure, research, defense, drilling, and other systems. Steel prices in India are also reasonable compared to most other nations. Due to the above-mentioned characteristics, Indian will surely overtake China as the biggest steel producer.