India Steel Market Watch
October 7: For wire manufacturers, this seems to be a double whammy. On one hand, they are dependent on imports of around 0.5 million tons (mt) of wire rods per annum, On the other, because of the safeguard duty, they are experiencing a deluge of finished wire products from China, Japan and South Korea, which is likely to kill demand for their products.
The Steel Wire Manufacturers Association of India (SWMAI), taking a contrarian stand against the recently imposed 20% safeguard duty on certain categories of steel products, said 30-40 percent of wire manufacturing capacity can close down, leading to 4 lakh of job losses. Expansions plans worth almost Rs 500 crore will be immediately halted, if a part of it is not already stalled, because of the uncertainty in the economy.
Though the safeguard duty is applicable for 200 days and on HR products, there is a proposal to expand the scope to cover many other items, which is causing SWMAI sleepless nights, because it will lead to a price disadvantage of '6,000 per ton.
"The import duty on wire rods is 10 percent but wire makers in the MSME space do not have a lobby in the government to make the import duty on wires also 10 percent. The steel lobby could get the safeguard duty in place but the duty on finished products has not increased. The Chinese have also decreased their prices. So, the country, instead of importing steel, is importing finished steel products. And at a much lower costs. The duty on finished goods has not been increased," said the managing director of a wire manufacturing company.
Over the last one year, there has been reduction in wire prices by 25-30 percent in tandem with the reduction in wire rod prices.
Another grouse is that steel wire makers are hamstrung by constricted raw material supplies because of the 10 percent customs duty on wire rods. They want it to be brought down to zero percent.