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K.R. Srivats

New Delhi, April 25 The domestic producers of hot rolled coils/sheets/strips, who are facing the brunt of increased imports of such products at abysmally low prices, may soon get some Government support to tide over this situation.

The Director General (Safeguards) has now recommended a provisional safeguard duty of 25 per cent on imports of hot rolled coils/sheets/strips up to the cost, insurance and freight (CIF) value of $600 per tonne, which is considered as a reasonable benchmark. The provisional safeguard duty, if levied by the revenue department, would be applicable for a period of 200 days.

In India, there are currently five producers who have the capacity to produce hot rolled coils/sheets/strips — Ispat Industries, Essar Steel, JSW Steels, Steel Authority of India and TATA Steels. The petition seeking safeguard duty was filed by Ispat Industries and Essar Steel. JSW Steel and Steel Authority of India had supported the petition.

In its preliminary finding, the Director General (Safeguards) had concluded there has been significant increase in imports at low prices. Also, the volume of imports surged in view of steeply falling import prices.

This has impacted the domestic industry prices, which fell from Rs 40,000 per tonne in April-September 2008 to Rs 26,296 in February 2009, and consequently led to decrease in profits. In fact, the domestic industry suffered significant financial losses and negative return on capital employed.

From the range of 1,000-8,000 tonnes per month, the volume of lower priced imports had suddenly surged to as high as 97,000 tonnes and 1,30,000 tonnes in January and February 2009 respectively, according to preliminary findings.

The domestic industry has argued that in February 2009 itself, about 1 lakh tonnes landed at Mumbai port at an average price of $450 per tonne.

The import prices started declining from above $1,000 per tonne in August 2008 and have continued to fall even now.

With many developed economies facing economic recession, the demand for these products have declined internationally. This has resulted in unprecedented and uneven surplus capacities with global producers of such products. This has forced the global producers to search for markets even at reduced prices. The vast Indian market which is highly price sensitive is becoming a choice for foreign producers, resulting in huge surge in low-priced imports.

The exporters of hot rolled coil/sheets/strips to India include Mittal Steel (South Africa), POSCO (South Korea), Corus Group (United Kingdom), Natsteel Holdings Pte Ltd (Singapore), Severstal (Russia), Wuhan Iron and Steel (Group) Corporation (China), Anshan Iron and Steel Group Corp (China), Beijing Shougang Co Ltd (China) and Tangshan Grand Faith Steel Co Ltd (China).

Importers/consumers of such products include Bhushan Steel (Delhi), Uttam Steels (Mumbai), Shree Precoated Steel (Mumbai), Toyota Tsusho Corporation (Bangalore), Brakes India (Chennai) and Rane (Madras) Ltd (Chennai).

More Stories on : Steel | Excise and Customs | Exports & Imports

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