Curbing imports, fuelling expansion projects priorities for new steel minister
India became a net importer of steel, after a gap of three years, in 2018-19. The industry has already asked the government to reimpose a safeguard duty of 25% in line with such protectionist steps being taken by the US, the EU, Turkey etc.
Arresting the trend of increasing steel imports, addressing the decline in local prices of the alloy and ensuring adequate supply of iron ore and capital for expansion projects are on the top of agenda for the new steel minister Dharmendra Pradhan.
The growing predatory imports, which disrupted the domestic market since 2014-15 for two years has started haunting the industry once again. India became a net importer of steel, after a gap of three years, in 2018-19. The industry has already asked the government to reimpose a safeguard duty of 25% in line with such protectionist steps being taken by the US, the EU, Turkey etc.
“If not done immediately, imports at a cheaper rate, will eat out the profit margin of the industry,” said JSPL’s joint managing director N A Ansari.
JSW Steel’s commercial and marketing director Jayant Acharya said India needs to protect its domestic steel industry, which otherwise would become a dumping ground for excess producing nations such as China, Japan and Korea He stated that steel should be kept out of the purview of regional comprehensive economic partnership (RCEP) which will cede space to China.
In fact, around 58% of steel imports to India are from Japan and Korea, with which India has free trade agreements (FTAs).
“Steel coming to India are not all special steel; a good chunk of them are commodity grade steel. They are coming at a lower price, unfair price,” Acharya said. Ansari added that imported price of plates are cheaper by `3,000-4,000 a tonne even after 12.5% customs duty paid.
India has, of late, started losing its share in traditional markets in West Asia and Africa to China and Japan, which are bound to look for newer geographies following stricter safeguard duty imposed on their steel exports.
In the year 2018-19, India’s imports rose by 4.7% to 7.83 MT and exports fell by 34% to 6.36 MT. Total production far exceeded consumption which stood at 132 MT and 98 MT, recording a growth of 3.7% and 7.5% respectively, over the previous fiscal.
During the peak of imports, India had increased customs duty, imposed minimum import price and anti-dumping measures. The measures helped in restricting imports.
India had imposed 20% safeguard duty on hot rolled coils (HRC) in September, 2015, but it has now expired in March this year. Prices of domestic steel have also seen a downward trend in recent times.
Pradhan, who hails from Odisha, a state rich in mineral resources and has the potential to produce one-third of India’s projected 300 MT capacity by 2030-31, also needs to ensure that the industry gets adequate and uninterrupted supply of iron ore, a key to steel production.
The government, on an urgent footing, needs to tackle a possible shortage in the supply arising out of expiry of leases of 59 operating merchant mines, out of 288 in total, in March 2020. This will create a supply shortage of around 60 MT and impact both public and private sector players such as RINL and JSW Steel. Imports of iron ore, now trading at around $106/tonne, are not viable either.
The industry also wants the government to bring down import duty on coking coal to nil from 2.5 % now. It also wants the government to create a conducive atmosphere for a rapid consumption increase. India’s per capita consumption is abysmally lower than the global average. Though it targets 300 MT production capacity by 2030-31, liquidity is still an issue.
Source :- Financialexpress.com