Steel makers oppose anti-dumping duty on met coke

Domestic steel makers have asked the government not to impose anti-dumping duty on metallurgical coke (met coke), imported mainly from Australia and China. The commerce ministry had recently recommended a $25 per tonne levy on such imports.

Met coke, a key raw material for the steel sector, constitutes 40-50 per cent of the total cost of crude steel. It is made from low ash and low sulphur bituminous coal.

The domestic met coke sector had petitioned the Directorate General of Anti-Dumping & Allied Duties (DGAD) for protection of the local industry from cheap imports from Australia and China. Following this, investigations began in December 2015 on the scope of levying such duty. DGAD has sent its recommendation to the finance ministry for approval.

Met coke prices have nearly tripled since January this year since the time the case was initiated and it is currently ruling around $350 a tonne, with no signs of abating. It is a critical input for steel making and any levy of anti-dumping duty at this stage will only fuel further the cost of steel making, Shivram Krishnan, director (commercial) at Essar Steel told Business Standard. In a letter to the Prime Minister's Office, Sanak Mishra, secretary general, Indian Steel Association, said: A levy of anti-dumping duty on met coke will have a cost push effect on the steel sector in India.

Mishra claimed that imposition of any such duty will cause the price of finished steel to increase by Rs 700-1,500 a tonne. Met coke prices have risen from $121 in January 2016 to $285 currently.

The domestic steel industry relies on imported met coke due to its low ash and low phosphorus content.

According to Indian Steel Association, domestic demand for steel remains muted and the prices remain under pressure resulting in lower capacity utilisation levels. Lower capacity utilisation pushes up fixed and debt servicing costs, impacting the viability of the entire sector.

This has put severe stress on the health of the domestic steel industry resulting in sharp deterioration in the economic performance of Indian steel companies.

Imposition of anti-dumping duty will further worsen the already bad situation by increasing the prices of inputs though sale realisations have remained more or less flattish, Mishra said in the letter.