NEW DELHI, MUMBAI :The ministry of steel has begun consultations with domestic producers to explore strategies for reining in imports as these have exceeded exports from India, the world’s second-largest producer of the alloy.
India imported 4.3 million tonnes of steel between April and November this year, as against exports of 4 million tonnes, becoming a net importer of the alloy.
Experts attribute the shift in the trade balance to low international prices of steel and higher domestic prices, which not only made imports viable but also inhibited exports.
Indian steel industry executives allege that Chinese producers are dumping steel in international markets given low demand in the Middle Kingdom. This has not only subdued international steel prices, but also made Indian steel uncompetitive in many key markets.
Ministry officials met with industry executives on Wednesday to discuss the situation, and have sought data and inputs from the industry and other stakeholders, said people in the know.
The ministry did not immediately reply to queries on the matter.
“India transitioned into a net importer during the first seven months of this year, mostly on the back of high domestic prices, allowing cheaper imports from countries like China and Vietnam to seep into the Indian market,” said Priyesh Ruparelia, vice president, co-group head, corporate sector ratings, Icra Ltd.
During September and October, benchmark hot-rolled coils (HRC) of steel from China were available at a discount of 13-14% to domestic steel, data from SteelMint show.
Imported steel takes 4-8 weeks to arrive in India, during which time prices can fluctuate, presenting a risk for importers. However, the high price delta during August and September between domestic and import prices prompted many dealers to place bulk orders from China, industry insiders said.
“In addition to this,” Ruparelia said, “Indian exports did not do well either. China, with its cheaper price, supported by weaker Yuan and amidst low domestic demand, has been exporting to regions where India also has good export presence.”
Light at the end of the tunnel
A gradual decline in domestic steel price since late October and an increase in international prices narrowed the price delta to an average of just under 5% as of December.
HRC prices ex-Mumbai have fallen to an average of Rs55,200 per tonne in December, compared to the Rs52,800 per tonne landed price of Chinese imports, as per SteelMint data. Experts are optimistic this will help bridge India’s steel trade deficit.
“International steel prices have increased since end-October, which would keep imports under check and also improve export prospects in the near-term,” Ruparelia said.
Duty measures
The domestic steel industry has been lobbying the government to introduce measures to check alleged dumping of steel in India from markets like China and Vietnam.
The steel ministry is exploring the viability of implementing WTO-compliant policy measures if it is found that steel is being dumped into India from markets like China as well as the likes of South Korea and ASEAN countries with whom India has free trade duties.
Among the proposed measures is a tariff rate quota, where prescribed limits are set for duty-free imports, followed by safeguard duties after the limit is reached, according to the people mentioned earlier.
Another consideration is the elimination of the lesser duty rules in antidumping investigations to speed up the process.
The lesser duty rule dictates that the adjudicating authority must levy duties lesser than the margin of dumping, if lesser duties are adequate to remove the impact on the domestic industry.
To conclusively determine this, however, requires thorough investigation and access to proprietary data of domestic companies, which delays the investigation.
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