The communication of this decision, it is reliably learnt, was said to have been made verbally recently in Delhi.

This retraction on the part of Indian government amounts to prevention of an anti-dumping complaint in India against steel imports at a time when trade cases are spreading beyond the developed countries to developing ones.

In February this year, Indofer, an association of Indian flat steel makers, filed anti-dumping cases against imports of HR coils from Japan, South Korea, South Africa and China. The Indian government reacted and requested the ministries of the respective countries to cooperate in the Indian government's investigation into the anti-dumping cases. Since then, exports of steel by these countries into India have stopped. Before that, Japanese steel mills had inquiries from India for a supply of around 50,000 tonnes of various steel imports. If the anti-dumping proceedings were not initiated by the Indian government, this supply would have arrived in the April-June quarter. At the start of the April-June quarter, there were reports of a tight supply-demand situation for steel products, especially fat steel, in the Indian domestic market. Two main factors were responsible for the tight supply-demand situation.

First, local steel makers preferred export deals to domestic sales due to inadequate distribution infrastructure at home. Prices of flat steel products in the domestic market were also lower than prices realised in the export market and by increasing exports, domestic mills were able to raise prices locally by creating tightness in supply.

Secondly, a supply shortage of imported steel products occured in India as a result of inactive steel imports from Europe as European steelmakers catered to active demand in Europe. For their part, the Indian user segment whose operations are partly based on imported materials, took action to oppose the anti-dumping cases that would bring further import restrictions, which is a matter of life or death for these segments. Opposing the anti-dumping measures were organisations such as the Cold Rolled Steel Manufacturers Association (Corsma) and the Federation of Indian Engineering Industry which is an association of pipe producers.

In its bid to meet such opposition, the Indian government recently retracted its request `unofficially' for Japanese cooperation in its probe into the cases.

However, it is not known whether similar `unofficial' retractions have been made to the other affected countries, viz China, South Korea and South Africa. With fears of dumping charges abating in India, it is learnt that Japanese steel makers are scheduled to start steel export negotiations shortly with Indian users for shipment in the July-September quarter.

Markets sources say that existing inquiries call for 30,000 tonnes of various steel products in total. But indications are that firm deals with the Indian users will end in limited quantities because it is reported that the Japanese steel makers have little leeway to take up spot steel exports.