End of MIP may hit import-dominated steel sector

Steel companies imported 6 mn tonnes of coking coal in April and May, according to official data

The government imposed anti-dumping duties (ADDs) on import of certain varieties of steel products from China and the European Union earlier this week.
 
The minimum import price (MIP) on steel products that has cushioned the domestic industry for almost a year is to end on February 4, unless it is extended. It has helped the Indian industry to gain some ground against cheaper imports mainly from China, South Korea and Japan.
 
Sanak Mishra, secretary-general, Indian Steel Association, said MIP was temporary relief in a market inundated with cheap Chinese import. After its imposition in February, prices of indigenously made products went up but are yet to reach the October 2014 level, which has been taken by the industry as a benchmark.

 

The MIP was first imposed for six months on 173 products. It was extended for two months in August but the list of items was pruned to 66. Products on which safeguard duties or ADDs were imposed were removed from the list. In December, the list was further curtailed to 19 products.
 
During the year, coking coal prices, an essential raw material for making steel, rose in the international market, mainly due to disruption in supply from Australia. India meets a majority of its coking coal requirement, the cost of which is a third of the steel industry’s price structure, through import.

 
“The cost of one tonne of coking coal was around $80 in January 2016. In November, it had increased to $283 a tonne,” said Mishra.
 
The industry has been deeply impacted by coking coal prices and our profitability continues to be low, said an executive. Coal prices are at present $193 a tonne, still very high, he added.
 
Steel companies imported six million tonnes of coking coal in April and May, according to official data.
 
Experts said the sector would continue to struggle, since consumption of steel is on a decline in other countries. So, China, Japan and South Korea are looking at opportunities to sell their surplus capacity in markets like India.