Posted on 08 Jan 2015
Despite withdrawal of export benefits, there won’t be a substantial reduction in imports of steel alloys from China as major chunk of the imported commodity continues to remain under the rebate umbrella, say industry officials.
However, some impact is likely and the possibility of a 10% fall in imports from China is not ruled out.
Effective 1 January, China has ended export-tax rebate on select steel alloys such as sheets, wires and rods that contain boron. Previously, Chinese boron–added steel enjoyed a rebate of 9-13% on the tax incurred, which helped manufacturers from China export such steel to India.
“There could be just about 10-12% fall in steel imports from China due to removal of rebate (on boron contained steel), as major chunk of steel imports such as (boron contained) cold rolled coils and zinc galvanized sheets are still under the tax rebate umbrella,” Jayant Acharya, director (commercial and marketing) of JSW Steel said.
Export of Chinese steel to India will be impacted only till some time as the Chinese producers will evolve an alternate mechanism to export steel to India, said C S Verma, president of Indian Steel Association.
“It is unlikely that Chinese will allow the export volumes to be affected significantly, given that the domestic consumption in China is going down,” said Verma, who is also the chairman of state-owned Steel Authority of India.
Alloys containing other elements are also not included under the rebate cancellation.
“We are not sure that this (removal of tax rebate) will reduce imports of Chinese steel into India as other options such as using chromium, which are still eligible for the rebate, are also open. Also, import of non- boron steel into India will continue as it is,” Shivram Krishnan, chief commercial officer, Essar Steel said.
India’s steel imports from China have risen significantly mainly from July following a slowdown in the latter’s economy. Rising imports are becoming a cause of concern for the domestic industry, which is finding it difficult to sell in the sluggish demand scenario amid rising input costs.
Usage of other elements instead of boron will increase cost of the steel alloy. But given the tax rebate the Chinese producers are enjoying, they are likely to even absorb this hike in input cost just in case they are unable to pass it onto the customer, said industry officials.
Moreover, even upon usage of elements other than boron, the final cost of imported Chinese steel will still remain lower than domestically available steel products, in turn continuing to hamper the domestic steel industry.
Most industry officials were of the view that is it important for the government to take corrective measures urgently on such imports.
“It is time for us (India) to guard our shore. The needed tariff barriers, anti-dumping etc need to be brought in place as early as possible to help the domestic industry,” said Acharya of JSW Steel.
