India Steel Market Watch
October 27: Indian steel mills are looking for more products to be brought under the duty umbrella after the safeguard on hot-rolled (HR) flats last month in order to curb imports that continue to impact the incremental domestic demand.
Steel producers have now filed a petition for imposition of a safeguard on colour-coated products of steel.
"To curb imports of steel, duty imposition has to be across the entire value chain and not just on certain type of HR coils. Hence, we (steel producers) have now approached the government to levy a safeguard on colour-coated and a decision is awaited," Seshagiri Rao, Joint Managing Director and Group Chief Financial officer at JSW Steel said at the company's earnings conference.
Other steel products of the value chain such as cold-rolled coils, galvanised steel and wire rods among others should also carry duty, either safeguard or anti-dumping, industry sources said.
"After HR-flats have come under duty, imports of cold-rolled full hard coils are beginning to rise. This clearly shows that duty is needed on the entire value chain, not just on a single product," said Jayant Acharya, Director, Commercial, JSW Steel.
On September 14, the government imposed a 20% provisional safeguard duty on hot-rolled flat products of non-alloy and other alloy steel, in coils of a width of 600 mm or more for a period of 200 days.
As per the Joint Plant Committee data, total steel imports during April-September, 2015 were 5.93 million ton (mt), up 42% from the same period last year. Hot rolled coil (HRC) imports were at 2.91 mt in the period under review, up 83% from the same period last year.
The consumer industry, on the other hand, remains concerned about more imported steel products coming under the duty umbrella and is of the view that such moves will only shrink the manufacturing base in the country and prevent price discovery.
"The steel user industry relies on HR-coils as its raw material to make downstream products such as cold rolled and galvanized steel. Post-duty, it is left with no other option but to import cold rolled full hard coils for manufacture of galvanised steel and consequently almost about 3 million ton cold rolling capacity will become idle," Mohan Gurnani, President of the Federation of Associations of Maharashtra, an industry body representing traders and small businesses in the state, said.
Currently, the landed cost of cold-rolled full hard steel is 20% lower than domestically produced cold-rolled.
"A safeguard duty on more downstream products will also close room for price competitiveness as domestic producers who are already selling these products at higher cost will be able to raise prices further in the absence of price parity," said Gurnani.
Cold-rolled coils find wide applications in key sectors such as automobiles and electrical appliances among others.