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.
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