Steel producers to benefit from import curb: India Rating

The government's recent move to curb imports of both alloy and non-alloy steel products is expected to help increase the realisations of domestic producers of these goods, a rating agency said today.
The government has hiked the import duty on non-alloy steel products by 2.5 per cent as domestic producers struggle to cope with surging cheap imports from China and South Korea, among other countries.
Non-alloy steel flats now command an import duty of 10 per cent, while non-alloy steel longs attract a duty of 7.5 per cent.
Anti-dumping duty on some alloy steel products is directionally positive in the long-term, India Rating and Research (Ind-Ra) said in a report.

The import restriction is expected to help increase the realisations of domestic alloy and non-alloy steel producers, it added.
The Finance Ministry has imposed anti-dumping duties on the import of hot-rolled stainless steel (HR SS) flats of grade 304 originating from China, Malaysia and South Korea.

The duties imposed are in the range of USD 180 per tonne for imports from Korea to USD 316 a tonne for shipment from Malaysia.
The alloy steel sector, of which stainless steel is a major part, has been particularly vulnerable as imports have averaged 25 per cent of the domestic output over the last few years despite having capacity utilisation of 50-60 per cent, according to the report.

The non-alloy steel sector, however, has fared better where imports have been nearly 8 per cent of domestic production with capacity utilisation of 80-85 per cent.
The quantum of imports of alloy steel products has always been higher as the domestic price per tonne of alloy steel such as 300 grade SS is significantly higher than that of non-alloy steel, making inward shipment of such items more profitable for the importer, the report said.
Given the current duty, stainless steel players might convert HR SS into cold-rolled stainless steel to circumvent the anti-dumping duty to negate its impact to some extent.

However, the rating firm said the possibility of this happening is low as importers prefer to import in HR form that can be customised thereafter for use in cold rolled form.
The anti-dumping duty could also have been extended to the 200 grade stainless steel as it commands a market share of more than 50 per cent in India, the report added.