Steelmaker Arcelor-Nippon says India's plan for raw material curbs ignores Red Sea crisis

NEW DELHI, June 21 (Reuters) - ArcelorMittal's India joint venture has privately warned trade officials in New Delhi that a plan to curb imports of a key raw material for steelmaking overlooks the implications of the Red Sea crisis, according to a letter obtained by Reuters.

The curbs planned by the world's second-largest producer of crude steel could impact output, as they cap imports of a steelmaking fuel, low ash metallurgical coke, also known as met coke, at 2.85 million metric tons per year.

The April proposal, which followed growing shipments that caused "serious injury" to domestic producers, also recommended setting quotas on met coke for exporting nations.

"India should not close its eyes to the geopolitical situation and implement a measure that may adversely affect its steel industry," the company wrote to the Directorate General of Trade Remedies (DGTR) in the June 3 letter.

The proposed quotas for European countries "will very seriously affect" imports from the region, the letter added.

ArcelorMittal Nippon Steel India (AM/NS India), the commerce ministry, and the trade remedies body did not respond to requests for comment.

No date has yet been set for the proposal, which is currently under review by the commerce ministry, to take effect.

India's plan to allocate about 40% import quota to European nations will impact AM/NS India as the Red Sea crisis has already forced the rerouting of vessels and increased ocean shipping rates, the company stated.

AM/NS India does not use domestic met coke. India's imports of the fuel have more than doubled over the past four years, with top suppliers including Poland, Switzerland, China, and Indonesia.

Attacks on ships in the Red Sea by Yemen's Iran-aligned Houthi militants are disrupting trade, causing freight firms to switch to routes around the Cape of Good Hope to avoid the Suez Canal.

India must reconsider the proposal as it could harm the steel industry, urged the company, which has not commented on the matter publicly.

This month, Reuters reported that India's steel ministry also did not favor limits on imports of met coke, citing risks to domestic output.

In its letter, AM/NS India argued that authorities proposing the curbs did not consider the potential increase in demand for met coke as steelmakers plan to expand capacity.

"The quantitative restraint on imports will reduce the ability of the steel industry to raise its capacity and growth levels," it added.