India Steel Market Watch
December 28: At a time the investment in the steel sector in India has not been very forthcoming, especially from the private sector due to the prospects not being very encouraging because of global excess capacity, particularly in China, the imposition of provisional safeguard duty of 20% by the government in September appears to have helped the domestic steel industry to some extent in November after a surge in imports in October, according to data available with ISMW.
The excess capacity in China, estimated to be about 300 million tons, has led to significant decline in steel prices and increased imports to India and the resultant financial stress on the existing domestic steel companies.
In September, the government of India had imposed provisional safeguard duty on hot rolled flat products of non-alloy and other alloy steel, in coils of a width of 600 mm or more for a period of 200 days.
The impact of imposition of duty was not felt in October as the imports surged to highest level of 1.18 million tons (mt) in the current financial year (2015-16), but the data for November reveals that there was at least some impact of safeguard duty as the imports fell to 0.77 mt during the month.
Many in the industry feel that encouraged by the response in November, the government may not only extend the provisional duty beyond March 2016, but may also take a few more steps to discourage imports to protect the interest of domestic steel makers.
However, others feel that the import of steel by India may start surging again from December or from January as the Chinese companies are contemplating reducing their prices to off-set the impact of duty imposed by India.
The anticipation of a surge in imports is based on logic that a similar trend was witnessed in July after the government had imported an anti-dumping duty for five years on imports of certain variety of hot rolled flat products of stainless steel from China ($309 per ton), Korea ($180 per ton) and Malaysia ($316 per ton).
In the aftermath of imposition of anti-dumping duty in June, a surge was witnessed in imports in July, but thereafter the imports fell in August and September before jumping sharply in October.
Earlier, in the union budget proposal for 2015-16, the government had raised peak rate of basic customs duty on both flat and non-flat steel to 15% from 10%, but even that could not prevent import.
“If a trend similar to that witnessed in August and September is witnessed then we may see a surge in imports in coming months (January-February 2016) and that will require further measures from the government,” an industry source said.
Following table gives month-wise trend of import of finished steel in each months of 2015-16 (in ‘000 tons) in the backdrop of imposition of anti-dumping duty in June and Safeguard Duty in September:
Finished Steel Imports |
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Month |
Non-Alloy (Carbon) |
Alloy |
Total |
April |
571 |
185 |
756 |
May |
785 |
131 |
916 |
June |
655 |
243 |
898 |
July |
831 |
200 |
1031 |
August |
734 |
237 |
971 |
September |
647 |
282 |
929 |
October |
844 |
337 |
1181 |
November |
585 |
181 |
766 |
Total |
5652 |
1796 |
7448 |