Tata Steel Managing Director TV Narendran expressed the anguish of local steelmakers, whose margins are increasingly coming under pressure, when he told a TV channel that imports continued to have an "adverse impact. The industry is waiting for the government to address the problem."
Steel imports rose 71 per cent in 2014-15 to 9.31 million tonnes (mt), when its exports suffered a setback of eight per cent to 5.5 mt, thanks to structural problems and tepid demand in target markets. The industry has made many representations to the government, for protection from imports.
But unlike the European Union, which saw merit in industry body Eurofer's representation that stainless steel products originating in China mostly and also Taiwan are sold in the region below production cost and would be putting anti-dumping duties of up to 25.2 per cent, Delhi is yet to act.
The only development here so far is a Budget announcement that although the tariff rate on steel products under chapters 72 and 73 of the Customs manual is raised from 10 to 15 per cent, the existing effective rates have remained unchanged. This left steelmakers disappointed. More recently, however, Steel Minister Narendra Singh Tomar said, "The industry and the government are equally worried about China dumping steel here. We have told the finance ministry about the compulsion for higher steel import duty. We are hoping for a favourable outcome."
Narendran complains about the arrival of a lot of China-origin steel. But South Korea and Japan, which under free trade agreements (FTAs), are selling steel here under falling rates of import duty are also causing market disturbances. Making the best of major devaluation of local currencies rouble and hryvnia, steel groups in Russia and Ukraine are exporting steel in a big way. India continues to receive a good amount of steel from the two countries. If Chinese exporters are not restrained, they will continue to sell more and more products here. Considering the state of our steel industry, Delhi should give serious consideration to industry suggestion of removing steel from the purview of FTA. The industry's case will become stronger if it could back up the demand for taking out steel from the two FTAs with "adequate facts and figures" for New Delhi to intercede with Tokyo and Seoul.
On a few occasions, Prime Minister Narendra Modi suggested that the steel industry would be playing a pivotal role in taking the 'Make in India' programme forward. Delhi's target is to raise the share of manufacturing sector in GDP from the current about 15 per cent to 25 per cent and in the process create an additional 100 million jobs by 2022. It will only be appropriate that the manufacturing sector as it rapidly expands should be using India-made steel. The country is targeting steel capacity growth of 300 mt by 2025 in which all major producers have plans to participate in a big way. But they will be crimped from doing so if imports continue to play havoc.
A point not to be missed is that China, where growth has slowed and investment in infrastructure and construction fallen stepped up exports by 51 per cent in 2014 to 93.78 mt, much to the annoyance of steelmakers in the EU, the US and here. They remain sceptical that Beijing cancelling export tax rebates for steel alloys containing hardening chemical boron will lead to restraining of Chinese exports. As the Chinese prime minister is keen to consolidate the economy, GDP growth will stay around seven per cent a year. He is also pushing hard to end corruption among bureaucrats and politicians and scrap environment polluting and uneconomic steel capacity in the face of opposition from provincial satraps.
All this boils down to flat steel demand in China, where double digit consumption growth became routine since the turn of the century. Morgan Stanley says demand for finished steel in China slid one per cent to 689 mt in 2014 marking a break with years of rapid growth. Contraction in production in the first two months of 2015 by 1.5 per cent to 130.5 mt on a year-on-year basis is confirmation of China Iron and Steel Association stand that production in the world's largest producer has "already hit a peak". Indian production during this period was up 7.2 per cent to 14.563 mt. Let imports not hamper our growth.
Source:business-standard.com
