Steel Imports by India Slow in September on Import Tax Increase
9 October 2015
Steel shipments to India grew at a slower pace for a second month in September after Asia’s third-biggest economy increased the import tax on some products, fearing an influx of cheaper goods from China. Domestic steel stocks gained.
Imports rose 1.7 percent to 850,000 metric tons last month from a year earlier, slowing from 17 percent in August and 69 percent in July, according to initial data from the steel ministry on Thursday. For the six months through September, imports grew 41 percent to 5.4 million tons.
The global steel industry is struggling with huge exports from China as excess supply spills onto world markets. China’s exports in August were close to January’s record and 25 percent more than a year earlier, according to customs data, forcing countries to impose protectionist measures. India raised the import tax on some products in August and imposed a 20 percent temporary safeguard duty in September. China’s devaluation of the yuan has also boosted its exports.
“Imports will be now curtailed because of the duties,” Giriraj Daga, a portfolio manager at SKS Capital & Research Pvt. in Mumbai, said by phone. “The imports will be declining now and a sharp impact may be seen from November onward.”
Shares of Tata Steel Ltd. rose as much as 4.2 percent, while JSW Steel Ltd. and Steel Authority of India Ltd. also gained along with the benchmark Sensex index.
Output in India dropped 0.8 percent during September to 7.28 million tons, while consumption climbed 5 percent to 6.2 million tons, the steel ministry’s data showed. The country’s steel industry may not meet the target of annual capacity of 300 million tons by 2025 as envisaged by the government’s Steel Policy 2012, the National Council of Applied Economic Research said on Oct. 6.
The current condition of the industry is “dismal with very low profits, low capacity utilization, and dim prospects of new private investments, either foreign or domestic,” the New-Delhi based council said. The sector is constrained by supply-side factors such as the availability of land and minerals, environmental clearances, inadequate demand and macro-economic factors, it said.