India Steel Market Watch
December 21: Steel companies and banks, faced with accumulating non-performing assets (NPAs) from steel mills, are pushing for imposition of a minimum price for imports, industry sources said.
Sources say the government is set to issue a minimum import price (MIP) notification shortly.
According to a CARE Ratings report, 145 steel and iron companies accumulated debt worth Rs 2.98 lakh crore and an unfavourable debt to equity ratio.
The ministry of steel had earlier this month sent a long list of items for the proposed MIP to the department of commerce. The latter has some reservations and views it as a trade barrier which might not comply with World Trade Organisation norms.
The list is likely to be pruned down to around 34 items, with stainless steel products expected to be kept out, sources said.
Both ministries are trying for a consensus on the rates and products to be covered. A final notification would come from the Directorate General of Foreign Trade, once approval is given by the commerce minister.
On December 11, the government imposed an anti-dumping duty of 5-57% on cold-rolled flat products of stainless steel for five years.
This was on such imports from China, South Korea, the European Union, America, South Africa, Thailand and Taiwan. On September 14, the government imposed a 20% provisional safeguard duty for 200 days on the import of hot-rolled flat products in coils of a width of 600 mm or more.
The Ministry of Steel had proposed 14 categories of products, with different MIPs for base and special grades.
The government is also likely to put in place a mechanism whereby if the FOB price of steel at the point of origin according to major indices is lower than the invoiced price, the listed one would be considered for enforcing MIP.
The department of commerce wishes to exempt exporters of products from the MIP norm if the imports were being used for manufacturing export products.
To prevent misuse of this, it is mulling a mandatory export obligation within six months and refund of actual value and MIP.
Steel companies had accumulated losses of Rs 4,238 crore in the quarter ending September, as against Rs 4,647 crore of profit last year in the same period.
Till October this year, a little more than 7 mt was imported, as against 5 mt during 2013-14. Imports are expected to reach 15 mt this year, sources say.
According to the World Steel Association data, the global steel demand is down 1.7% over last year.
In China, it is minus 3.5%, in Korea minus 1.3% and Japan minus 5.4%.