Safeguard duty fails to curb steel imports
21 October 2015
The safeguard duty imposed by India a month ago on steel imports has had limited impact, except for a price increase of Rs 1,000 a tonne. Imports have maintained an upward trend and even inventory levels continued to remain high.
The government had imposed a 20 per cent import duty on certain products for 200 days from mid-September.
Total imports in the first half through September were 5.93 million tonne (mt), up 42 per cent; imports from Japan and Korea were up 80 per cent and 77 per cent, respectively.
China accounted for 1.59 mt of imports. Hot rolled coil (HRC) imports have increased from 1.59 mt to 2.91 mt, up 83 per cent. Here again, China, Japan and Korea together accounted for 2.25 mt, up by 88 per cent. Japan’s share was up by 135 per cent and Korea’s up by 220 per cent. Inventory levels were also at a higher level than during March-end.
A recent Icra report says, “Following the imposition of the duty, the differential between domestic and international HRC prices had reduced significantly and the domestic prices were now largely aligned with imported steel prices. However, international HRC prices have declined further by around five per cent after the duty was imposed, which along with weak domestic demand conditions and prospects of further capacity addition in India in the near term were likely to keep domestic prices under check.”
JSW Director-Commercial & Marketing Jayant Acharya said without the duty the situation would have been far worse. “Supply will get limited. The problem is, China has again reduced prices and so did Japan and Korea. So there is a neutralisation impact,” he added.
“September imports are in line with August but typically there is a lag in impact,” a steel producer pointed out.
But the industry has now come up with the demand of extending the safeguard duty to the entire value chain. “If it doesn’t happen, the next target will be cold rolled products. Imports of colour coated products have already gone up significantly,” Acharya said.
The government has also taken steps to boost infrastructure, which could help increase the demand.
The Icra report said while growth remained steady at upwards of six per cent during the first three months, it declined to 0.5 per cent in July 2015, indicating that the sustainability of demand improvement was still uncertain. Domestic steel production growth declined to 1.3 per cent during the period April-July 2015 from 3.3 per cent registered in FY15.