Scrap importers, who have been severely hit by the sliding rupee, informed ISMW that importing the material has become rather difficult today, mainly because of the volatility in the foreign exchange.
“Traders discuss at the rate of Rs 67 to a dollar but by the time the actual deal is struck, the currency may have edged down to Rs 68-69 etc,” they said.
It may be recalled that the rupee has weakened by 3% against the dollar in January 2016 alone. In fact, the rupee's performance in January was the worst for any major emerging market currency in Asia this year.
However, these players expect some policy decisions. “There is generally a gap of 2-3 months between the time one puts in the orders and the scrap import taking place. In the intervening period, a clause could be put in place on duties on scrap imports in a bid to protect the domestic players,” said a source.
The scrap importers also complain that they do not have a strong lobby…”Bodies representing them can merely appeal to the government,” said an industry source.
A steel industry analyst added that, generally banks would also want protection for the larger players because that is where the chunk of their bad debt exposure is and it is in their interest that larger players in the steel industry are faster nursed back to health.