The government is planning to slap a safeguard duty on cheap imported steel from China and Korea and do away with the import levy on inputs such as iron ore and coking coal.
Steel mills want the duty on imported iron ore to be slashed to zero from 2.5 per cent to make their products competitive. The country is expected to import 15 million tonnes (mt) of iron ore worth over $13.5 billion this year on account of local shortage. Shutting down of the mines because of environmental concerns and legal cases has also hit the mills hard, leading to a five-fold increase in imports from 2011 levels.
Jharkhand has recently closed down 12 of its most productive mines, including SAIL’s Meghataburu and Tata Steel’s Noamundi. The latter meets as much as a quarter of Tata Steel’s Jamshedpur plant’s ore demand. Kiriburu-Meghataburu supplies SAIL’s Bokaro plant with the bulk of its requirement.
India imports ore mostly from Australia and Brazil and a prolonged shutdown of the mines is likely to raise global prices.
Coking coal
Meanwhile, the duty on coking coal, which too stands at 2.5 per cent, may also be slashed to zero following dwindling supplies.
Domestic steel mills need to blend imported high grade coking coal from Indonesia or Australia with local coal to fire their furnaces.
Last year, India imported about 33mt of coking coal, which may increase to 36mt this year as steel-making capacity has gone up. The steel ministry has sent separate notes to the finance ministry seeking the duty cuts.
The government is also mulling a higher duty on imported steel as there has been a surge in imports in the last few months.
A 7.5-per-cent ad valorem duty has been unable to deter Chinese, Korean and even Ukrainian steel makers from selling various kinds of flat and bar steel rods to India as there exists a $25-30-a-tonne difference between various grades of imported and local steel. Last year, there was a 21 per cent surge in hot-rolled coil imports.
Source: Telegraph India
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