Anti-dumping duties on steel products to create a conducive environment: ICRA

25 May 2017

The government's recent decision to impose a five year definitive anti-dumping (ADD) duties on import of hot-rolled (HR) and cold-rolled (CR) flat steel products is likely to create a more stable operating environment for domestic flat steel players, ratings agency ICRA has said.

The definitive ADD has been fixed at a level which is the difference between the product's landed value and a given threshold (fixed at US$ 489/MT for HR coils, US$ 561/MT for HR plates/sheets, and US$576/MT for CR coils). "This is expected to prevent the landed cost of imported flat steel from falling below this threshold, thereby protecting domestic players from the volatility in international steel prices to an extent," the ICRA report added. Incidentally, domestic steel players  have been facing competition from cheaper imports from countries like China, South Korea, Japan, Russia, and Ukraine in 2016.

“Flat steel products covered under the ADD regime had contributed around 60% to India's cumulative steel imports between FY2015 and FY2017 and, therefore, the current measure is expected to keep India’s steel imports under check in coming years”, Jayanta Roy, Group Head, Corporate Sector Ratings at ICRA said.

Global trade action on dumping of steel has been led by the European Union (EU) and the USA, with both countries putting in place import barriers on multiple steel products not only from China, but also from many South-East Asian countries, including Japan and South-Korea. Indian steel makers have generally not been at the receiving end of these measures thus far, which presents opportunities for domestic mills to increase their market share globally, especially in the EU region, which remains remains India’s largest destination for steel exports.

However, Roy pointed out that there is significant overcapacity in the global steel industry, and "any softening of international prices like in the recent past may affect domestic prices too if exports are non-remunerative, leading to price-based competition in India, especially given the slackness in domestic demand”.