Indian Steel Industry: Anti-dumping investigation is long term measure

The government made some changes in the MIP notification for 173 steel products last week. Although the original notification valid for 6 months had excluded imports under advance licences as well as imports of API grade steel X-52 and higher grades for manufacture of pipes used for transportation of oil and gas, the notification on August 4 has dropped HR Coils/Sheets/Plates (alloy and non-alloy) and CR products out of the purview of MIP. It may be noted that in order to provide relief to the domestic steel industry suffering disastrously from the cheap imports of HRC (including SS) from China, South Korea, Japan and CIS countries, the government had issued on September 14 last year (after preliminary findings) a safeguard duty (SD) of 20% for a period of 200 days.

Subsequently the final findings dated March 15, 2016 confirmed the SD of 20% (minus anti-dumping duty, if any) to be imposed on imports of all types of HRC (7208 and 72253090) to be applicable during September 14, 2015 to September 13, 2016, at the rate of 18% during September 14, 2016 to March 13, 2017, at the rate of 15% during March 14, 2017 to September 13, 2017 and at the rate of 10% during September 14, 2017 to March 13, 2018. The final findings were ratified by a notification dated March 29, 2016. It may be noted that these SD is not applicable on imports from developing countries, being negligible, except China and Ukraine.

On August 5, 2016 the government issued another interesting notification exempting a host of HRC products, where significant imports have been taking place, from the ambit of SD, if these are imported at or above the CIF prices (assessable value) at or above $445 (MIP for HRC) and $500 (MIP for Plates). Meanwhile the government issued on 2nd Aug’16 acknowledging the contention of the domestic industry that while they are against double protection (MIP and SD), there needs to be a mechanism installed to discourage cheap imports after the MIP period (up to October 4, 2016) is over. The notification therefore fixes SD (minus Anti dumping duty) at the rate of 10% in the first year, 8% in the 2nd year and 6% for 6 months in the third year, provided the imports take place at a price below $504/t. The notification dated August 5, 2016 appears to have been aligned with MIP notification rather that envisaging a different CIF value of imports and would be applicable.

Based on the petitions filed by SAIL, JSW and Essar Steel on injury determination due to continuous surge of cheap imports from China, S Korea, Japan, Russia, Ukraine, Brazil and Indonesia, the government came out with preliminary findings on anti- dumping duties on HRC (alloy and non-alloy) on August 1, 2016 and AD duties on cheap imports of CRC/Sheets on August 3, 2016. The AD duties on HRC have been fixed as the difference between landed value of the subject goods and $474/t CIF for HRC and $557/t CIF for Sheets and Plates. It was followed by another anti- dumping notification dated August 3, 2016 for imposition of AD duty on CRC/Sheets as the difference between landed price and CIF price OF $ 594/T.

Let us take a simple example to clarify the different notifications. China is exporting HRC at $365.50/t FOB. The landed CIF value may be taken as $395.50/t at Mumbai. Till March, 2017 the HRC has to be imported at or above $445/t CIF without SD. Otherwise SD at 20% over and above 12.5% customs duties have to be paid which makes the CIF price $524/t. On the other hand, if AD is finally imposed, the AD would be $78.5/t on the above CIF price to make it $474/t CIF.

It must be mentioned that an appreciative government has been taking appropriate and timely measures to rescue the domestic steel players from the fierce challenges of cheap imports eating into the market and profitability of these players making them incapacitated to repay the debts from banks and other financial institutions. From the above, it is clear that while MIP and SD are temporary steps, the AD investigation is a long-term measure and is based on analysis of injury margin and dumping margin.

The long-term solution to the woes of Indian steel industry would continue to be a big push to generate fresh demand for steel in the country by the various end using sectors.