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Steelmakers seek 25% safeguard duty on imports

Date: 20-06-2019
Subject: Steelmakers seek 25% safeguard duty on imports
BHUBANESWAR: The Indian steel industry is seeking a safeguard duty of 25% ad valorem on a wide range of steel products in the face of a sharp and significant increase in imports. 

In a petition filed with the Directorate General of Trade Remedies, the Indian Steel Association (ISA), on behalf of domestic steelmakers, has argued that as a consequence of duties imposed by the USA, and consequently by the EU, Turkey and Canada, steel exports from some Asian countries are being diverted to India. 

ET has seen a copy of the petition. 

Steel exporters from South Korea, Japan, China, and Asean countries have diverted as much as 43% of the volume, or 1.204 million tonnes, that they lost from the US into India, the petition claimed. 

Domestic steelmakers, who had convinced the government to impose trade remedial measures in 2016 and 2017, argue that whatever gains those measures achieved will be eroded if the government failed to immediately impose safeguards against steel imports. They expect the trend to worsen with the Eurasian Economic Union – which includes Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan – also having initiated safeguard investigations. 

The ISA petition seeks a tapering safeguard duty on semis, flats, longs, pipes and tubes, stainless steel and railway products, over a period of four years – starting with 25% in the first year and going down to 22% in the fourth year 

Although domestic steelmakers have benefited from government interventions, they have reported declining profitability in the last two quarters of 2018-19, mainly due to a fall in prices. 

There has been a sharp decline in the prices of steel imports despite a steep increase in production costs. For example, between October 2018 to June 2019, international cost index for hot rolled coils rose by $27 to $339 per tonne from $312, while prices of imported HR coils (benchmark China HR export FOB prices) declined to $490 a tonne from $547. Prices of the same in India have come down to Rs 40,000 per tonne from Rs 47,000, which is a decline of about $100. 

In India, steel demand is predicted to grow 7.1% in 2019 and 7.2% in 2020, against global demand growth of just 1.3% and 1%, respectively. 

Steel imports had declined to 7.96 mt in 2016-17 from 13.43 mt in the previous year and 10.61 mt in 2014-15 due to the government’s trade measures and a change in global market conditions. 

However, the ISA petition argues that the current trends be compared to 2013-14, when steel imports stood at 6.01 mt given the unprecedented and abnormal spike in imports during 2014-15 and 2015-16. Steel imports of 8.67 mt in 2018-19 is an increase of 44% over 2013-14 levels, it pointed out. 

Source: economictimes.indiatimes.com

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