US rollback may benefit local steel companies

The US government's plan to roll back additional import tariffs, imposed in March 2002, on galvanised and cold-rolled steel may have a positive impact on some of the Indian steel companies.

Industry sources said that companies such as Tata Steel, Ispat Industries, Jisco and some stand-alone cold-rollers could be major beneficiaries of the move, even though most Indian companies are diverting their exports to the vast Chinese market.

The US currently imposes an import duty of 30 per cent on these two categories of steel. It proposes to cut import duties, but has not stated by how much.

The US stand on the anti-dumping duties slapped on hot rolled coil (HRC) steel in 2001, however, remains unchanged.

Indian galvanised and cold-rolled steel may be freely exported to the US without attracting an anti-dumping duty (as in the case of HR coils) on account of India falling under the category of `developing nations'.

Senior executives at Essar Steel said that more than the decrease in tariffs, the price and quality of the products would determine the fate of steel exports from India.

R C Nandrajog, vice president, finance, Tata Steel, said, "The tariff reduction will lead to companies becoming more competitive, which in turn may result in an improvement in margins. We may also expect a change in the export mix to various countries."

Vinod Garg, executive director, marketing, Ispat Industries, said, "This may result in prices becoming more competitive with more players jumping into the fray. However, the impact on total steel exports out of India may be negligible as demand from China is continuously growing."

Tata Steel exported 51,000 tonne of steel to the US in 2002-2003 while Jindal Iron and Steel, the largest exporter of galvanised and cold rolled steel, exported around 15,000 tonne of galvanised products to the US in the first quarter ended June 30 2003.

Currently, about 20 per cent of India's total steel exports go to the US, amounting to around 4.5 lakh tonne.