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| 'Raise customs duty on Chinese steel imports' |
| Kunal Bose / Dec 22, 2009, 00:07 IST |
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SAIL Chairman Sushil Kumar Roongta is known to keep his own counsel which he will share with the government. Only on rare occasions he will be using a public platform to air his views on steel related issues calling early resolution.
 In the last few days Roongta chose to speak first on raw material security, specially on coking coal in which our steel industry is largely import dependent and then in quick succession on large arrivals of imported steel destabilising the local market. The industry’s concerted campaign to abort dumping of the metal injurious to steelmakers gets a leg up with Roongta joining the chorus.
Roongta being at the helm of the country’s largest steel group which is 85.82 per cent government-owned, his coming out in the open on market destabilising impact of dumping may well be construed as a government attempt to test the water, that is the reactions of importers and dispatchers of the material. This, however, may or may not be the case.
Last time we heard steel minister Virbhadra Singh on the issue, he said he was not aware of “any large scale dumping of cheap steel from China or Commonwealth of Independent States (CIS) countries. In case, I come across such case, my ministry will deal with the situation sternly.” That was said nearly four months ago.
Roongta is not saying dumping is an immediate threat. But it could be so in the near future as steel industry in many places of the world is beset with “considerable unutilised capacity.”
In an economic downturn, countries nursing surplus capacity will have the natural tendency to sell goods abroad at discounted rates by fudging production costs to avoid WTO recommended reprisals. Even when an offending country is caught out in the act, the triggering of anti-dumping measures is a time consuming process. You also get many false alarms about dumping. That will explain why Singh is dealing with the subject with such circumspection.
Roongta makes the point that so long as “foreign players are pricing steel products fairly, we don’t have a problem. But when they start selling at throwaway prices, domestic steelmakers come under pressure.”
Even while the demand for steel in India is growing well at 9 per cent annually, product prices remain under pressure because of the global environment.
In the eight months to November 2009, our steel imports rose 11 per cent on year on year basis to 4.58 million tonnes. More than the rising volume of imports, arrivals of hot-rolled (HR) coils are a point of concern for Roongta and his industry colleagues. Roongta says, “Whatever quantity of HR coils of foreign origin finds its way here, the import prices set the benchmark for the local market.” His coming into the protesters’ ring has got much to do with the thinning profits of steelmakers here.
Our principal concern is China, which is finishing this year with crude steel production of 571 million tonnes leaving it with considerable surplus after domestic use. Even while China’s steel exports till November fell 62 per cent to 21.26 million tonnes, India’s receipts were up. How does one solve riddle as to why China continues to produce steel in such large volumes in the face of rising inventories and a seasonal dip in demand.
The Chinese steel industry is loathed for its alleged practice of selling the metal in the world market at below the production cost. What could be in the back of Roongta’s mind when he urges the government to put in place a “strong anti-dumping duty regime with real time response” is China going to commission another 50 million tonnes capacity next year over the existing 610 million tonnes.
Thereby hangs a tale. That is India’s continuing vulnerability to Chinese steel coming here in bigger and bigger quantities. The minimum that New Delhi could do in the prevailing situation is to suitably raise customs on HR coils imports straightaway. At the prevailing steel prices, importers complaining about any duty revision will have a ring of hollowness.
At the same time, we should not ignore the trickiness of complaints regarding dumping and hidden non-WTO complaint state subsidies. The point will be illustrated by the fact that as the US and European steel industries have filed a number of anti-dumping suits against China, the latter in its turn has now alleged that the US and Russian companies are selling flat-rolled electrical steel used in power equipment at highly discounted rates in China.
Not only will China penalise the importers by slapping anti-subsidy charges, but such imports led the country to investigate the role of foreign subsidies for the first time. China has in the past conducted many anti-dumping investigations though. Does not all this explain the extraordinary carefulness with which Singh is dealing with anti-dumping complaints?
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