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The US has threatened China's steel industry by proposing a 236 per cent tariff on imports. In contrast, India has only raised import duty by 20 per cent on Chinese steel. In an interview to Bloomberg TV India, JSW Steel’s JMD and Group CFO, MVS Seshagiri Rao, says India needs to do more in terms of safeguarding the domestic industry.
Going by the US decision to impose a whopping 236 per cent duty on Chinese steel, do you think India needs to do more in terms of hiking import duties?
Imports (of Chinese steel) continue to increase. That’s why in September, exports from China were at 11.25 million tonne. That’s why we have seen several countries initiating action against Chinese imports. Chinese imports to India have grown over 18-19 per cent in the current fiscal. So we are not seeing any let up as far as imports are concerned. That is why even though the government move to impose provisional safe guard duty of 20 per cent on hot-roll coils is welcome, it has to be done on all the products because imports are coming in the form of wire rods.
Globally, iron ore prices are down and the domestic prices are not too high. How is that affecting the margins?
That is what is really puzzling us. Iron ore prices internationally came down below $50 per tonne from around $55 and now it is further falling. In fact we are seeing it at about $47-48 per tonne whereas yesterday NMDC announcing an increase in iron ore fines price by ₹100 per tonne. When international prices are falling and and the domestic iron ore supply is still not normal, it is astonishing for us to see iron ore prices in India going up.
Moody’s has recently changed its outlook on JSW Steel to “negative”. Would you like to comment on this?
In the first six months of FY16, we have shown a 4 per cent growth in volumes. In the domestic market, we have achieved a growth of 25 per cent in terms of volume. So we are doing quite well in terms of volumes. But steel prices have fallen.
Costs have not fallen in the same proportion. Iron ore prices started correcting in the domestic market only from February 2015. The full benefit of that has not come in. That is why there is pressure on margins.
Also, we have invested in expansion by 4 million tonnes, from 14 to 18 million tonnes, due to which there is pressure on margin.
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