The government’s decision to prune the steel items covered under the Minimum Import Price list to 66 from 173 products and extend it by two months is expected to pose fresh challenges to steel manufacturers.
The restriction on imports will now cover only 29 per cent of steel shipped into India against the coverage of 95 per cent provided by earlier list.
Notable exclusions in the new MIP list include hot rolled and cold rolled flat products with width of over 600 mm and other alloy steel products such as boiler quality and high pressure steel.
The HR flat products, which were not covered under the new MIP scheme, are trading at a discount of about $70 a tonne or 14 per cent in India as against the landed cost of imports from China, as per an ICRA estimate.
However, domestic cold rolled coil prices, which are not covered either under MIP II or safeguard duty, are costlier by about $52 a tonne compared to landed cost of Chinese CRC offers at $547 a tonne.
Jayanta Roy, Senior Vice-President, ICRA, said CRC prices may come under pressure in the coming days unless international prices harden or the Centre initiates a different protective measure.
Historically, the spread between CRC and HRC has been in the range of about $70-80 a tonne. The price gap between domestic CRC and HRC will narrow to $35 a tonne, if CRC prices in India fall to import price parity. This will exert pressure on domestic HRC prices as well, he said.
Amidst an anaemic steel demand growth of 0.4 per cent in first quarter of this fiscal down from 4.6 per cent recorded in FY’16, any increase in imports would pose further challenges to domestic steel companies.
Source: The Hindu Business Line