India said it’s being forced to consider steel safeguard duties and more anti-dumping curbs as the yuan’s devaluation threatens to stoke surging Chinese shipments.
A steel import-tax increase earlier this month may not be enough of a deterrence, Financial Services Secretary Hasmukh Adhia said. Adhia has seen the steel industry contribute to elevated bad debt in India, in part as producers struggle to compete with imports from nations such as China and Russia.
“The global lack of demand in steel is so strong that one isn’t sure how, even after this recent increase, it’s going to help,” Adhia said in an interview on Sunday in New Delhi. “We’ll have to think about other options, whether safeguard duty and anti-dumping duty can also be used.”
China’s shipments of metals such as steel and aluminum were at a record even before the yuan’s devaluation on Aug. 11 threatened to make the export flood from the top producer even cheaper. Asian, European and U.S. mills are braced for pressure on profits, with Chicago-based Century Aluminum Co. citing Chinese exports for the permanent closure of an idled smelter.
India’s import levies were pushed up after talks at the highest levels of government concluded that domestic producers must be shielded for the time being, Adhia said. The industry should also spell out the need for more measures, he said. The finance and commerce ministries usually take decisions on curbs.
Import Tax
India raised the import tax on certain steel products to 12.5 percent from 10 percent on Aug. 12. The government imposed some anti-dumping duties in June. Indian mills including Tata Steel Ltd., the nation’s biggest producer, had sought higher taxes to check imports.
“A safeguard duty will be very important and will support the industry,” said Goutam Chakraborty, an analyst at Emkay Global Financial Services Ltd. in Mumbai. “Companies will be able to restrict a price fall in the domestic market.”
Steel company shares rose in Mumbai trading. JSW Steel Ltd. climbed 4.4 percent as of 1:47 p.m. local time. Tata Steel rose 1.9 percent. Steel Authority of India Ltd. advanced 1.4 percent.
Indian steel imports jumped 58 percent to 3.5 million tons in the four months ended July 31, according to government data. In the first seven months of 2015, total exports from China expanded 27 percent to 62.13 million tons, the highest ever for the period, according to data compiled by Bloomberg.
“China has so much capacity,” Adhia said.
Source: Bloomberg
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