Faced with 80 per cent rise in imports during the first quarter of the current fiscal, the Rs 5500 crore caustic soda industry has urged the government to levy 20 per cent safeguard duty to protect the domestic industry from overseas dumping.
Imports, that had slumped to 5000 tonnes per month towards the end of the last financial year have now surged alarmingly to 25,000 tonnes each during the first three months of the current year. Last year, average monthly import stood, however, at 11,000 tonnes. Most importantly, soap and other consumer industries including cleaning agent manufacturers, have booked over 85,000 tonnes of imported caustic soda for delivery in July and beyond.
The demand assumes significance as domestic industry needs the government’s intervention to get rid of cheap imports largely from China, Qatar, Saudi Arabia and Thailand. Domestic user industries are preferring imports to domestic procurement of soda lime and flake finding imported goods cheaper by 20-25 per cent depending upon the source of origin.
“Power constitutes about 60 per cent of production cost in India which is much higher than the competing nations. In India, 36 caustic soda manufacturers avail power from state power grids at Rs 5 per unit. Now, since 2500 units of electricity is required to produce one tonne of caustic soda, the cost of power itself comes to around Rs 12,500 of the current prevailing market price of Rs 24,000 per tonne,” said Y R Singh, executive director of Alkali Manufacturers’ Association of India (AMAI).
Now, as per existing industry provisions, if the industry suffers a setback due to the sudden spurt in imports, then the industry should make a recommendation to the government for immediate action.
Now, AMAI is preparing draft to be presented to the ministry of commerce for assessing the damage the domestic industry has been caused.
Since, the quantum of damage is yet to assessed, AMAI is keeping its fingers crossed at 20 per cent.
With an installed capacity of 29.22 lakh tonnes, the existing 36 producers recorded an overall output of 22 lakh tonnes of caustic soda at an average 77 per cent of capacity utilisation. However, the cheap imports have reduced the domestic industry’s demand resulting into a fall in average quarterly capacity utilisation from a staggering 88 per cent in the first quarter of the last financial year to 71 per cent in the corresponding quarter of the current financial year.
India imported 1.28 lakh tonnes and exported 39,000 tonnes of caustic soda last year. The country’s total consumption, however, was recorded at 22.8 lakh tonnes during 2008-09.
The global caustic soda demand has slumped since the beginning of economic meltdown began in September last year. Consequently, major producers and the Europe and America are dumping cheaper goods into India thereby, forcing local producers to cut prices to match with overseas market. As a result, prices of caustic soda has declined by 25 per cent in the last few months thereby, squeezing margins of domestic producers severely.
