The government has indeed rendered significant help to Indian steel industry from the frequent surge in low priced imports of various categories of steel for the last 3 years. When the massive flow of steel imports reached an unprecedented level of 12 MT in FY16 from the normal level of 6-7 MT and impacted most adversely the domestic steel producers in terms of loss of market share, EBITDA, employment and inventory accumulation by a spate of dumping prices and by reaping the benefits of progressive duty reduction under RCEP, the government imposed Minimum Import Price (MIP) in early 2016 initially for 6 months for all major steel products.
It was done as a temporary measure. The anti-dumping petitions were filed by the domestic producers, but the investigation process involving opportunities to both the parties to argue after collating all relevant data was time consuming. Meanwhile, based on the appeal by the domestic producers and following the extant WTO guidelines on safeguard measures to restrict sudden surge in imports, the government imposed safeguard duties on HR Coils and CR Coils. While safeguard duties are purely temporary steps and are applicable on all importing sources for a specific product, anti-dumping is country-specific on a particular product.
The safeguard duties on progressively reducing basis were announced on specific products and accordingly all the major steel products got covered either under MIP or SD till August 2016. It was the time when the provisional AD was imposed on HR, Plates, CR and subsequently on wire rods. It was later followed by AD on alloy steel bars and SS HR. MIP was withdrawn in October 2016. The preliminary AD imposed in August 2016 was confirmed on HRC, Plates, CRC in April 2017 for next 5 years effective from 2016 after the investigations got completed. Currently AD is applicable on import of alloy and non-alloy HRC (HRC width<=2100mm, thickness<=25mm under HS Code 7208,7211, 7225 and 7226) from China, South Korea, Japan, Russia, Brazil and Indonesia, if the landed CFR price is lower than $ 478/t CFR if imported from Hyundai steel of South Korea and from all other above countries, if the landed price is lower than $489/t CFR.
For imports from all other countries, a SD of 15% is applicable till September 2017 and 10% up to March 2018.
For HRS and HR Plates (in alloy and non-alloy grades), the applicable AD duty would be the difference between CFR import price and $561/t CFR if imported from these specified countries and imports from all other sources would be subject to Safeguard Duty of 10% up to November 2017, 8% up to November 2018 and 6% till May 2019. For CRC/S imported from China, Japan, Korea and Ukraine, the AD was fixed at the difference of landed CFR price and $576/t CFR.
For wire rods (alloy and non-alloy under HS Code 7213 or 7227 barring TMT, SS Bar and high speed Bar) imported from China, the AD has been announced as the difference between landed CFR price and $535/ $546/t CFR. The latest is the AD announced for next 5 years on imports of colour coated/ pre-painted alloy and non-alloy products (under HS Code 7210, 7212, 7225 or 7226) imported from China and EU as the difference between landed price and $822/t CFR. The wide fluctuations in international prices of Flat and Long prices during the last 2 years have made differential impact on the effectiveness of AD.
Till early 2016 international prices exhibited a declining trend and therefore the AD threshold offered adequate breathing space to the domestic industry. For instance, Chinese export offer declined to $ 273/t FOB ex-Tianjin in January 2016, rose to $ 443/t FOB in November 2016 and currently ruling at $ 552/t FOB. The rise in global prices contributed by increase in iron ore and coking coal prices and market buoyancy in EU, US and Japan helped domestic prices to move up by 18-20% during the period. The injury to the domestic producers due to dumping and low dutied imports gave way to market improvement, albeit much less than potential, and enhanced the capability of the steel industry to become a little more credit worthy in the eyes of the lending institutions.
Of course, the sustainability of the uptick in steel business environment depend on infrastructure investment in construction and infrastructure, affordable housing with steel concrete composite construction, growth in automobile and other processing industries. Another significant contribution by the government to support the steel industry came in the form of Mandatory Quality Certification of 33 steel categories. It made a number of poor quality and defective imports to be restricted barring those coming under Advance License route.
It not only made the domestic producer aware of the prime importance of supply of quality steel in the market but also acted as a dampener to all the inferior grades exporters to India. The much needed policy support by the government to the ailing steel industry in last 3 years must take the industry back to the rails by being cost competitive and a major player in the global market.
DG, Institute of Steel Growth and Development (Views expressed are personal)