Metallurgical coke curbs: Commerce dept, SteelMin tussle over import quota

The steel ministry and the commerce department are in a tussle over imposing quantitative import restrictions on low-ash metallurgical coke, a key raw material used to manufacture steel.

In a letter last week, the steel ministry urged the commerce department not to accept the recent recommendations of the Directorate General of Trade Remedies (DGTR) on imposing quantitative import restrictions on the raw material.

It said if the import restriction kicked in, it would not only disrupt production and supplies to downstream industries and increase the cost of steel but will also be a setback to the steel industry, which has committed large investment in line with the government’s aspiration to make India self-reliant.

The steel ministry’s request comes against the backdrop of the final findings of the DGTR investigation released last week. 

The DGTR recommended putting “quantitative restriction” on imports of low-ash metallurgical coke having ash content below 18 per cent for one year because there had been a sudden and sharp increase in the import of the product during the period of investigation.

In response to a query from Business Standard, the commerce department said the DGTR also examined the impact of imposing safeguard measures on downstream industries such as steel, pig iron, alloy steel, and other industries and it was observed that the impact would be negligible on the downstream industries.

“The recommendations are under consideration with the Department of Commerce. The Department of Commerce held a stakeholder consultation on May 28, 2024. The Department of Commerce will take a decision after a holistic examination of the facts and circumstances and taking into consideration the representations received from various stakeholders including the Ministry of Steel,” it added.

A query sent to the steel ministry did not elicit any response till the time of going to press.

Imports of metallurgical coke will be limited to 2.85 million tonnes per year if the DGTR recommendations are accepted by the commerce department and later notified by the Directorate General of Foreign Trade (DGFT).

Last year, five companies -- BLA Coke, Jindal Coke, Saurashtra Fuels, Vedanta Malco Energy, and VISA Coke -- had alleged metallurgical coke imported into India in large quantities was causing “injury” to the domestic industry. They had urged the DGTR to initiate investigation to mitigate the “harm”.

According to the final findings of the DGTR, there has been a sudden, sharp, significant and recent increase in imports of metallurgical coke and imposing safeguard measures, in the form of quantitative restrictions, will be in the public interest.

“It will prevent serious injury to the domestic industry while having a bearable impact on the downstream industry as the demand of the subject goods would continue to be met by way of imports as well as sufficient capacities with the Indian industry,” according to the DGTR findings.

People aware of the matter said the steel ministry had argued domestic producers were not capable of meeting the demand for metallurgical coke because of the quality factor.

Steelmakers rely on imports to meet their requirements.

Officials in the steel industry said the DGTR recommendations were based on the data from FY20 to FY23, and the situation had changed since then, especially after the pandemic.

Restrictions will be detrimental to the government’s vision to achieve 300 million tonnes of steel by 2030 as well as rollout of the production-linked incentive scheme, they added.

THE ISSUE

> Metallurgical coke is a key raw material used to manufacture steel

> Some companies flagged that metallurgical coke imported into India in large quantities is causing ‘injury’ to the domestic industry

> Increase in imports were mainly from China, Poland, Switzerland, Indonesia, Japan

> Final findings of DGTR recommended limiting import of low ash metallurgical coke at 2.85 million metric tonne for one year

> Steel ministry say import curbs will disrupt supply chain