Local Cos Fear Dumping by Foreign Steel Players
Firms expect China, Japan and Korea to divert shipments originally meant for US, EU to India; ICRA says rupee’s fall may boost steel exports
Vatsala.Gaur@timesgroup.com
Mumbai:
India is facing the threat of dumping of foreign steel, led by the diversion of exports originally meant for the US and European Union, which could lead to an encore of 2016 when local mills making the alloy were crippled by shipments from overseas, fear domestic steelmakers.
Ratings firm ICRA, in a note on Wednesday, said in the first quarter of fiscal 2019, the country’s steel exports dropped by over 33% whereas imports grew more than 11%. Consequently, India turned a net importer in the quarter, after having been a net exporter for the last two years.
However, with a sharp rupee depreciation in recent months, the ratings firm expects a slide in steel imports and boost to exports, which is likely to improve India’s overall steel trade balance.
The industry has started “sensitising” the government to take action to check unfair imports that could accelerate in the future. It wants the reference price of the antidumping duty to be pushed up or a replication of what Europe has recently done to protect local steelmakers by providing safeguard measures.
“In the last quarter (first quarter of FY19), China, Japan and Korea diverted twice their export to the US into India,” Seshagiri Rao, joint managing director at JSW Steel, had told reporters in July at a conference held to announce the company’s first-quarter results. He said the imposition of safeguard measures by the EU would hit the industry more in the coming quarters.
He had bolstered his statement with data from the last quarter. Imports into the US from China, Japan and Korea reduced by 240,000 tonnes after the imposition of tariffs. But their collective shipments into India increased by 450,000 tonnes.
“Countries are putting safeguard measures to protect their domestic steel industry against unfair dumping. The Indian government had taken safeguard measure by way of reference price at $480 per tonne to curb dumping. This has now become redundant in view of the higher international prices. Consequently, imports into India have risen by 31% in Q1 of FY19 compared to Q4 FY18. Hence there is a definitive case for revision in reference price,” said an Essar Steel spokesperson.
While the US had, in March, imposed a 25% import tariff on steel entering that country, more recently, on July 18, the European Commission announced safeguard provisional measure to curb diversion of exports to Europe. According to the measure, a 25% tariff will be imposed once imports exceed the average import of the last three years. This will be applicable to all countries save some developing ones.
“Unlike the USA, the EU tariffs would be more worrying for Indian steelmakers, given that export volumes by Indian mills to the EU are over five times of volumes exported to the USA," said Jayanta Roy, group head of corporate sector ratings at ICRA. “Moreover, as per India’s Q1 FY2019 steel import data, redirection of impacted steel volumes from countries like Japan and South Korea, with whom India has free trade agreements, is clearly visible.”
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