Steel MIP to stay as shield for Indian firms against foreign onslaught

By: | Published: July 29, 2016 6:03 AM

MIP was imposed on February 4 for 173 products in the range of $341 to $752 a tonne mainly to rein in galloping imports from China, Japan and Korea.

MIP was imposed on February 4 for 173 products in the range of 1 to 2 a tonne mainly to rein in galloping imports from China, Japan and Korea.MIP was imposed on February 4 for 173 products in the range of 1 to 2 a tonne mainly to rein in galloping imports from China, Japan and Korea.

Continuation of minimum import price (MIP) on steel beyond the scheduled expiry on August 5 looked almost certain on Thursday with both the industry and the steel ministry being on the same page on the issue.

MIP was imposed on February 4 for 173 products in the range of $341 to $752 a tonne mainly to rein in galloping imports from China, Japan and Korea.

Sources in the steel ministry said the continuation was required for more than one reasons. It will ensure curtailment of unfair and predatory pricing of steel by overseas mills and easing of financial stress in the steel sector. These have proved beneficial in the past six months and will continue to extend support to the domestic steel industry to tide over the present condition.

The industry got a huge breather with the imposition of MIP in February — imports started declining, prices zoomed and capacity utilisation of the domestic steel industry improved in sync with the rise in sales. Imports were earlier eating out the share of the domestic industry in their home turf.

As the scheduled expiry date for MIP was approaching, all domestic steel makers started pitching for the continuation of the measure as “MIP does stop people from selling steel in India at a loss”. They were also of the view that if MIP was withdrawn, the domestic industry would be badly impacted.

Steel minister Chaudahary Birender Singh, who had a meeting with industry associations here on MIP on Thursady, said, “There was almost unanimity among the steelmakers that MIP should be repeated.”

Though the minister refrained from commenting whether his ministry would recommend for the continuation or not, but said if continued, he would also want a six-month road map from the industry to become competitive as “these things (MIP) are not going to help ultimately”.

The minister added that there were “divergent views” among the stakeholders in the meeting with some wanted to include more products in the MIP list while others wanted some exclusion.

JSW Steel’s joint managing director MVS Seshagiri Rao, who was present in the meeting, said, “MIP has to be extended, expanded and effectively implemented.”

Vishal Agarwal, chairman, ICC Odisha, said, “The benefit of domestic demand should go to the domestic industry.” Agarwal added most of the industry associations pitched for extension of MIP on grounds that it would enhance their capacity utilisation during the meeting.

There had been around 34% fall in domestic steel prices between April, 2014 to January, 2016, at par with the decline in international prices largely on account of the China factor. India had imported 10 MT steel during April, 2015 to January 2016 clocking a 24% growth over the corresponding period of the previous year. Exports have been on the wane.

MIP yielded results for the domestic steel industry even as the domestic industry alleged instances of circumvention. Imports started falling and with this, domestic industry’s sales were also started picking up and prices has been on the rise. But, after correcting positively till May, steel prices became “very volatile and were sliding,” according to steel secretary Aruna Sundararajan who also predicted that it “would take some time before it settles”.

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