At the same time, India’s anti-dumping probe into China-origin imports looms large, with Chinese mills facing challenges from expiring Bureau of Indian Standards (BIS) certifications.
This is likely to affect market dynamics, sources have told Fastmarkets, expecting this to become a major sticking point for Chinese producers in the near term, even as they seek to increase export volumes in the face of weak domestic demand.
For instance, India imported more than 771,000 tonnes of electrical steel in 2023, according to data from India’s Ministry of Commerce and Industry. In 2023, India became China’s largest buyer of electrical steel, accounting for 189,184 tonnes (15%) of China’s total exports.
On the flipside, while Chinese exports of non-grain oriented electrical steel (NGOES) exports fell in September compared to August, shipments to India rose month on month, according to October 20 data from the General Administration of Customs. Indian imports had surged even as buyers secured Chinese supply ahead of BIS certification expirations for Chinese mills.
Rising capacities to fulfil demand
Private Chinese steelmaker China Oriental Group announced two joint ventures with ArcelorMittal, the world’s second-largest steelmaker, on October 16 to supply China’s automotive and power generation sectors with cold-rolled NGOES and grain oriented electrical steel (GOES), produced by the downstream joint venture.
The total investment for these ventures is $2.66 billion, with $660 million allocated to the upstream venture and $2 billion to the downstream venture.
The upstream facility, scheduled to begin production within 18 months, targets an initial annual capacity of 2.5 million tonnes, with a potential expansion to 3.5 million tonnes further down the line. Low-carbon operations will be supported by a government-backed 400MW wind plant and a 350MW solar power plant.
In the same week, Japan’s JFE Steel and India’s JSW Steel completed a 40.5 billion Indian Rupees ($481.6 million) acquisition of Thyssenkrupp Electrical Steel India on October 18, accelerating their entry into the high-demand GOES market.
The acquisition was completed through JSW JFE Electrical Steel Private Ltd, a 50-50 joint venture formed in February 2024 to establish a greenfield electrical steel plant in India.
“This acquisition will enable the consortium of JSW and JFE to manufacture this product in India and supply it to customers domestically and globally, thereby promoting import substitution and advancing a self-reliant India,” said Jayant Acharya, joint managing director & chief executive of JSW Steel.
The acquired plant, located in Nashik, Maharashtra, is one of India’s earliest and only manufacturers of electrical steel sheets, with an estimated capacity of 50,000 tonnes per year. A source close to the deal added that the plant was currently producing a few thousand tons below its actual capacity.
JSW JFE Electrical Steel Private Ltd also plans to set up an integrated electrical steel manufacturing mill in Bellary district, in the southern Indian state of Karnataka. The new plant will have an initial capacity of 80,000 tonnes per annum.
The joint venture will invest $670 million to build the new NGOES manufacturing plant for conventional and high-permeability grades of electrical steel.
The new facility is expected to commence production by 2027, increasing India’s total GOES capacity to over 130,000 tonnes per year. India still primarily relies on imported electrical steel resources to meet its growing power sector demands.
A source in the Indian electrical steel industry noted that the new shareholders of the 50,000-tonne GOES plant would first focus on maximizing sales from the acquired plant.
“The previous owners were unable to grow the market, which was one of the reasons they sold the plant,” said the source.
According to Thyssenkrupp Steel Executive Board spokesman Dennis Grimm, sourcing raw materials from Thyssenkrupp’s German steelworks to India was costly and reduced competitiveness. Setting up a raw material production facility in India was economically unfeasible for Thyssenkrupp.
But JSW-JFE plans to produce grain-oriented hot-rolled coil required for GOES production in India, according to industry sources, especially as the Indian electrical steel segment has significant growth potential.
This is because demand for electrical steel is expected to increase with the expanding power sector and green energy initiatives, while tariff protections for electrical steel manufacturers are expected to attract more producers to India.
An Indian electrical steel industry participant estimated that about 20-25% of India’s NOES steel capacity remains unutilized due to cheaper imports from China.
It is against this backdrop that Fastmarkets has launched new electrical steel prices for the China domestic and India import markets, amid rising calls from market participants for more price transparency into this growing market. Find out more about our electrical steel prices.
