India sets floor price for steel imports to stem flow from China

India on Friday set a floor price for imports of steel products to deter countries such as China from undercutting local mills, the first time it has taken such a step in over 15 years even as the country remains the world's only major growing steel market.

Top Indian steel makers such as JSW Steel, Tata Steel Ltd, Jindal Steel & Power Ltd and Kalyani Steels have been lobbying the government to take more steps to protect their margins after a hike in the import duty last year failed to cut shipments from China.

"The implementation of the minimum import price will give stability to the local steel industry," Steel and Mines Minister Narendra Singh Tomar said. "This is an important step towards the success of 'Make in India' (manufacturing push)."

The duty on various steel products ranges between $341 per tonne and $752 a tonne, the government said in a statement.(bit.ly/1ocN9Lk)

Indian steel companies, shares in many of whom rose on Friday in anticipation of the measure, welcomed the move but said more needs to be done, such as raising the import duty further to 25 percent.

"This measure will ensure a level playing field to Indian steel industry which has been adversely affected by dumped imports from various sources," Shivaramkrishnan, chief commercial officer of Essar Steel India, told Reuters.

"We are thankful to the government of India and hope this will suitably address the concern of surging cheap imports."

India is the third largest steel producer in the world with a total installed capacity of 110 million tonnes. But the industry says it has seen a hefty squeeze in margins due to an onslaught of cheap imports from China, as well as Russia, Japan and South Korea.

Imports of steel surged by 22.8 percent in December 2015 over the previous month and the country's trade minister had called the recent fall in China's yuan a "worrying development" that could have pushed up inbound shipments further.

China produces nearly half the world's 1.6 billion tonnes of steel, and exported more than 100 million tonnes of the alloy last year, more than four times the 2014 shipments from the European Union's largest producer, Germany.

The floor price on steel imports will be valid for six months.