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The worst fears of steel companies on cheap imports from Iran seem to be coming true with three vessels carrying 75,000 tonnes of Hot Rolled (HR)coil arriving at Kandla port in Mumbai last month.
Import from Iran is considered illegal as it is facing the US economic sanctions.
Lower price
Due to a glut in production and low domestic demand, Iran has been tapping into the Indian market directly and through the Jebel Ali port of the United Arab Emirates.
Incidentally, all the three vessels carrying HR coils are loaded from Bandar Abbas, Iran, sources said.
According to a steel company executive, the allegedly “illegitimate imports” from Iran come far below the reference price of $489 a tonne, almost $85 cheaper than that of China, the lowest cost producer. Imports of steel from Iran at a lower price is not only a loss to exchequer, but also a clear violation of the US sanctions as India is only exempted to import crude from Iran, he added.
Sources said, Iran, all this while was tapping into India through the UAE and this is the first time that shipments have come directly from an Iranian port.
In fact, he added shipments directly from Iran had come to a halt in the last few months after the US sanctions but have resumed despite the Indian Steel Association apprising the government on the latest trend.
Violation of the sanctions
In a letter written to the Ministry of Steel, the Association has urged the government to stop the clandestine dumping of steel by Iran through UAE when domestic companies are facing multiple challenges.
Referring to the drop in direct imports from Iran after economic sanctions and the rising steel shipments from UAE, the association said imports from Iran or transhipment from the UAE needs to be banned since it is in grave violation of the US sanction which can attract retaliatory measures by the US on India.
The predatory pricing poses a serious challenge to Indian steel industry, it added.
Steel imports from the UAE have grown at an alarming pace and are expected to go up over three times to 2.34 lakh tonnes (1.18 lt) this fiscal.
Surging imports
Import of 1.75 lt of steel from the UAE in the first nine months of this fiscal has already surpassed imports of the whole of last year. On the other hand, shipments directly from Iran have come to standstill from 34,330 tonnes logged in FY18.
Of the overall imports from the UAE, flat steel accounted for 65,000 tonnes. Conventionally, it is a net importer of flat steel products.
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