The recent levy of 20 per cent safeguard duty on hot-rolled steel coils has driven away the first level of value addition in steel processing to the foreign shores.
Major importers are now booking cold rolled (full hard) coils for delivery later this month almost at the same price they were shipping in HR coils before the duty was levied. Cold rolled steel is the first value addition to hot rolled coils produced by steel companies. “Importers have booked cold rolled full hard sheets at $320 (`21,100) a tonne from China for delivery in October. Similar offers are being made by Barzil, Russia, Korea and Japan, the countries which are most hit by the safeguard duty,” said a steel company official.
Before the duty was levied, hot rolled coils was the preferred import consignment. The current trend will not only hit large integrated steel producers, such as Tata Steel, Essar Steel, and Sail, that produce HR coils, but also the stand alone re-rollers who were producing CR coils.
Excess capacity Major steel producing countries are sitting on excess production capacity of 686 million tonne (mt) and waiting for export opportunities. China, which has a production capacity of 1,140 million tonne (mt), has an excess capacity of 317 mt, over three times the annual production capacity of India. H Shivramkrishnan, Chief Commercial Officer, Essar Steel, said the surge in volumes of hot rolled imports into India with sharp depreciation in currencies of exporting countries such as Korea, Brazil, Japan and others has resulted in significant injury to the domestic industry.