Extension of anti-dumping duty positive for domestic flat product manufacturers, says ICRA
New Delhi [India], Feb 10 : The Government of India on February 7, 2017 extended the validity of the provisional anti-dumping duty (ADD) imposed on hot rolled (HRC) and cold rolled coils (CRC) by two more months.
Domestic HRC manufacturers will now get the protection of anti-dumping duty till April 7, 2017, and those producing CRC will get protection till April 16, 2017. The imposition of ADD, along with safeguard duty (SGD) and minimum import price (MIP) have resulted in a 37 percent YoY de-growth in India's steel imports during April-December of FY2017, after rising steeply by 26 percent YoY in FY2016 and 71 percent YoY in FY2015.
In fact, this decline in steel imports has coincided with a strong growth in steel exports by domestic mills, supported by an improvement in the pricing scenario in international markets. This has helped bridge the gap between India's steel imports and exports to just 0.52 million tonne (mt) during April-December of FY2017 as against a much wider 7.64 mt during FY2016.
"With domestic steel demand growing at an anaemic rate of 3.4 percent in 9M FY2017, this sharp decline in steel imports has helped domestic steel mills regain some lost market share. Moreover, with around 80 percent of India's steel imports taking place in the flat product category this extension of ADD remains a near term positive for domestic flat product players," said Senior VP and Group-Head-Corporate Sector Ratings ICRA, Jayanta Roy.
Given the 35 percent rise in Chinese export offers of HRC and CRC between April and February of FY2017, the current landed price of imports is higher than the notified level stipulated for imposition of ADD (For HRC and CRC, the threshold landed price is USD 474/MT and USD 594/MT respectively).
"Therefore at current international prices, the provisional anti-dumping duty does not kick-in. Nonetheless, given the large volatility witnessed in international steel prices in the last two years, the extension of ADD would provide a floor to domestic flat steel prices against any shocks in international prices in the immediate term," added Roy.
The Union Budget for FY2018 has stressed on investments in steel consuming sectors including infrastructure and affordable housing, which has the potential to generate significant incremental demand for steel in the country if such projects are implemented efficiently. However, any significant and immediate pick-up appears uncertain as of now given the weakness in India's steel demand conditions otherwise. In such a scenario, the extension of ADD would give some relief to domestic flat product manufacturers in the coming months. (ANI)