Posted on 05 Aug 2015
Steel majors for new import bar
Steel makers, including government-controlled
Steel Authority of India (SAIL), have sought imposition of 'safeguard
duty' on imported hot-rolled (HR) steel coil.
SAIL apart, JSW Steel, largest domestic producer, and Essar Steel have
filed a petition with the directorate general of safeguards. “We
received a complaint from these three companies last week. The
investigation for imposing safeguard duty will begin once the procedural
requirements are fulfilled,” said a senior government official, on
condition of anonymity.
Under pressure from cheaper imports and slack domestic demand, JSW
reported a loss of Rs 106.8 crore for the quarter ended June, against a
net profit of Rs 656 crore for the corresponding quarter last year.
“While cheap imports might benefit user industries in the short term,
surely reliance on imported steel cannot be a sustainable business
strategy,”
Sajjan Jindal, its chairman and managing director, said while addressing its 21st annual general meeting on July 28.
SAIL reported a 20 per cent decline in profit after tax at Rs 2,093
crore for 2014-15. Two months earlier, the government raised the import
duty to 10 per cent from the earlier 7.5 per cent on flat steel products
and to 7.5 per cent from five per cent for long products. According to
industry sources, this hasn't been enough to stop the surging import
from China.
India’s total steel import surged 71 per cent to 9.31 million tonnes in
2014-15 from 5.45 mt the previous year, with Chinese imports having the
majority share. China exported 1.5 mt HR coil; imports also came sizably
from Japan and Korea. The HR coil market is about 17 mt, of which seven
mt is captive consumption of steel companies. About 2.5 mt is imported.
Under the safeguard norms, the process can be initiated if the majority
of market entities are being affected by cheaper imports. The three
companies constitute 68 per cent of HR coil production. “They, however,
have the backing of all players including Tata Steel, Jindal Steel &
Power and Bhushan Steel,” said an official.
While imports from China attract a duty of 10 per cent, products from
Japan and Korea are shipped at only one per cent duty, as we have free
trade agreements with both countries. Industry insiders claim the three
countries selling HR coil to Indian buyers at less than their domestic
rates.
“Since their production capacity is higher than the local demand, they
have increased imports at cheaper rates. The excess production is done
at even a loss to recover the fixed costs,” said a source. Korean and
Japanese HR coil cost $355-375 a tonne, though they sell at over $500 in
domestic markets, is the claim. The imports have pulled down prices in
the domestic market, too.
After the verification process, the directorate general would decide
whether to initiate an inquiry, after which it would need to notify the
World Trade Organization.
The importing countries would then be given an opportunity to be heard.
Once the directorate general decides to impose a duty, the Central Board
of Excise and Customs would notify it. Unlike anti-dumping and
countervailing duty, safeguard measures are applied uniformly on all
imports irrespective of source; the other two duties are
source-specific.
