Indian Govt said to mull quality restrictions on steel to curb imports
11 March 2015
India plans to impose quality restrictions on hot and cold-rolled coils and sheets used in cars, pipes and appliances to limit record shipments from China, Japan and South Korea, people familiar with the matter said.
The steel ministry plans to add 18 products to a list of steel items that currently need certification from the Bureau of Indian Standards, said two people, asking not to be identified pending an announcement. The proposal has been sent to other ministries for consultation, they said.
As steel demand has waned globally in the past few years, a steady stream of cheap imports has flooded the Indian market, where prices have remained relatively high because inputs are costlier. One way to deter exporting nations without resorting to political trade measures is to require quality checks.
“We have to make sure that sub-standard and cheap steel doesn’t enter the country,” said Jayant Acharya, marketing director at Mumbai-based JSW Steel Ltd, India’s third-largest producer. “The time has come to act quickly.”
Steel secretary Rakesh Singh and joint secretary Sunil Barthwal couldn’t be reached on their office phones for comment. C.S. Verma, the chairman of the second-largest producer, Steel Authority of India Ltd, also couldn’t be reached on his mobile phone.
Once feedback is received from the ministries and industry, a final order will be sent for notification to the Bureau of Indian Standards. Companies will be given a notice period before the new rules take effect, the people said.
Higher local output, increased imports and falling exports mean there are 7 Million tonnes of additional supplies in India, compared with 2 million tonnes of incremental demand, according to steel ministry data.
“Indian steel makers haven’t been able to make the best use of the fall in raw material prices,” said A.S. Firoz, chief economist at the steel ministry’s Economic Research Unit in New Delhi. “Their costs remain high because of iron ore shortages, high overhead costs and lower plant efficiencies.”
China, the biggest steel exporter to India, has been struggling with a capacity glut that has brought down its average steel mill capacity use to a decade-low of 71%, according to Bloomberg Intelligence analysts Zhuo Zhang and Kenneth Hoffman.
A decline in the ruble led to a jump in imports from Russia over the past few months, according to data from India’s steel ministry.
“One possible step to curb imports is having stricter quality norms, which will discourage cheap Chinese imports,” said Giriraj Daga, a portfolio manager at SKS Capital and Research Pvt. “India is facing near-stagnant demand growth and the flood of imports is exacerbating the situation.”
India last month raised the provision of levying customs duty on steel imports to as much as 15% from a peak rate of 10%. Bloomberg
Source : http://www.livemint.com/