The steel industry has got a breather with the government levying 20 per cent safeguard duty on imports, but there are no indications of any relief to manufacturers of other key metals like aluminium.
The downturn in global metals prices continues to sting India with the wholesale price index for ‘Basic Metals, Alloys & Metal Products’ group falling by 1.9 per cent in the month of August, the joint highest fall for the sector in the past one year.
In the month of June as well the index for the basic metals group had fallen 1.9 per cent. The index has been falling consistently since October 2014. However, since June this year, the intensity of the decline has increased.
In fact, the domestic aluminium industry met the Finance Minister on Sunday to seek relief, even as it had started cutting production. Steel makers have managed to get a safeguard duty even while the market share of imports remains at 12 per cent. The aluminium industry on the other hand is battling cheaper imports whose market share has risen to 56 per cent.
On September 9, the Directorate General of Safeguards had recommended imposition of safeguard duty to on hot-rolled flat steel products for 200 days. Such products account for almost 80 per cent of India’s steel imports.
On Monday, Finance Minister Arun Jaitley announced that the government will impose a 20 per cent safeguard duty on hot-rolled flat steel products.
Safeguards duties are emergency measures that are WTO-compliant and may be temporarily applied when imports pose a threat to the domestic industry.
Experts suggest the safeguard duty will give domestic industry headroom to raise prices. However, they warn that such plans can be scuttled if China decides to drop prices.
“India Ratings estimates that the landed price of hot rolled coil imported from China will be more expensive than domestic products by ₹2,000 a tonne. This will also provide headroom to domestic steel producers to increase their prices and volumes, provided Chinese players do not reduce their prices further,” said Bijoy Thomas, Analyst at India Ratings and Research.