Despite the recent import duty hikes, steelmakers on Thursday said they will have no option but to resort to pruning production if the government does not take some more “extraordinary” measures like imposing anti-dumping duty or safeguard duty to check burgeoning imports, industry sources said.
“Since imports from Japan and Korea would not have any impact on imports because of the free trade agreements, the depreciation of the yuan would at best neutralise the latest customs duty hike, whereas Chinese imports are anyway cheaper. Hence, it will not help in curbing imports. So, there is a need to take some extraordinary measures,” JSW Steel’s joint managing director and group CFO M V S Seshagiri Rao told FE.
Ruling out any price increase now, he said if no further action is taken by the government soon, steelmakers may have to slash production, or produce more and loose more. The latter is likelier since import prices are determining the domestic selling prices nowadays. The level of utilisation by Indian steel companies, which have over 100-million-tonne MT capacity now, currently stands at around 75% and pruning production would further bring it down, which might also lead to job cuts and its contribution to economy, which is around 2% now.
Japan and Korea accounted for around 45% of the total imports which stood at 3.5 MT during the April-July period of the current year, compared to the year-ago period. India had imported 9.3 MT steel during the last fiscal, up 71%. China accounts for more than 30% of the total imports to India.
That the Chinese export prices have fallen by more than 31% in the April-June quarter of the current fiscal to $ 355 per tonne is a cause of concern not just for Indian steelmakers, but throughout the world. Many countries have resorted to protecting their home turf.
Indian Steel Alliance’s secretary-general Sanak Mishra said that had the duty been raised to 15% from the current 10-12.5%, it would have brought some relief to the struggling steelmakers, who are under tremendous stress now. Stating that the member companies of the association have already petitioned the government for imposing safeguard duty, the time is not far off when they would also seek imposition of anti-dumping duty on imports of steel.
Justifying the proposed move, he said domestic companies are capable of producing 92% of the total steel currently being imported into the country and thus there was a need to save them.
While anti-dumping duties are country-specific, safeguard duties are product-specific. So steelmakers would have to apply separately for dumping duties on steel imported from different countries. The quasi-judicial process for ascertaining and determining if dumping actually takes place has to be completed too. These duties are imposed if an investigation establishes that the exporter is selling in India below his cost and such dumping causes “injury: to the domestic manufacturers.