Definitive Anti-Dumping Duty on Imported HR and CR Products to Benefit Domestic Industry: ICRA

India Infoline News Service | Mumbai | May 23, 2017 16:08 IST

With a view to protect the domestic flat steel manufacturers, the Government of India recently took a significant step of imposing five year definitive anti-dumping (ADD) duties on import of hot-rolled (HR) and cold-rolled (CR) flat steel products.

With a view to protect the domestic flat steel manufacturers, the Government of India recently took a significant step of imposing five year definitive anti-dumping (ADD) duties on import of hot-rolled (HR) and cold-rolled (CR) flat steel products. According to a recent note from rating agency ICRA, the long tenure of ADD regime is likely to create a more stable operating environment for domestic flat steel players. The definitive ADD has been fixed at a level which is the difference between the product's landed value and a given threshold (fixed at US$ 489/MT for HR coils, US$ 561/MT for HR plates/sheets, and US$576/MT for CR coils). This is expected to prevent the landed cost of imported flat steel from falling below this threshold, thereby protecting domestic players from the volatility in international steel prices to an extent.
 
During FY2016, domestic steel players were at the receiving end due to cheaper imports from countries like China, South Korea, Japan, Russia, and Ukraine. Says Mr. Jayanta Roy, Senior Vice President and Group Head, Corporate Sector Ratings at ICRA, “Flat steel products covered under the ADD regime had contributed around 60% to India's cumulative steel imports between FY2015 and FY2017 and, therefore, the current measure is expected to keep India’s steel imports under check in coming years”.
 
Global trade action on dumping of steel has been led by the European Union (EU) and the United States of America (USA), both countries putting in place import barriers on multiple steel products not only from China, but also from many South-East Asian countries, including Japan and South-Korea. Indian steel makers have generally not been at the receiving end of these measures thus far, which presents opportunities for domestic mills to increase their market share globally, especially in the EU region, which remains India’s largest destination for steel exports. However, Mr. Roy added, “There is significant overcapacity in the global steel industry, and any softening of international prices like in the recent past may affect domestic prices too, if exports are non-remunerative, leading to price-based competition in India, especially given the slackness in domestic demand”.
 
This apart, the Union Cabinet on May 3, 2017, has cleared the National Steel Policy (NSP) 2017, which aims at increasing the crude steel capacity to 300 mt by FY2031 from the current capacity of 128 mt. This would require an investment of around US$ 140 billion. Given the weak financial health of many domestic steel players, this seems a tall order. In this context, the definitive ADD and the Government’s efforts towards sorting out of stressed assets assume significance, since, in the current scenario, lenders may not have the appetite to extend fresh funds to the stressed steel sector players.

Disclaimer: The contents herein is specifically prepared by ‘Dalal Street Investment Journal’, and is for your information & personal consumption only. India Infoline Limited or Dalal Street Investment Journal do not guarantee the accuracy, correctness, completeness or reliability of information contained herein and shall not be held responsible.

 

Advertisements

  • Save upto Rs.2.67 lakh with Pradhan Mantri Awas Yojana ...Know more
  • Now Save Rs.3150 on your Demat Account ...Click here
  • Now get IIFL Personal Loan in just 8* hours...APPLY NOW!
  • Get the most detailed result analysis on the web - Real Fast!
  • Actionable & Award-Winning Research on 500 Listed Indian Companies.