A panel of secretaries is likely to take up the issue of imposing safeguard duty on hot rolled coils (HRC) on May 11.
The Directorate General of Safeguards (DGS) has favoured imposition of 25 per cent safeguard duty on HRC below $600 a tonne. Industry sources say the issue would be finally decided by the panel.
The DGS decision came in the wake of an application filed by Essar Steel and Ispat Industries, and supported by Steel Authority of India (SAIL) and JSW Steel.
The average monthly imports, which were around 80,000 tonnes during July-September 2008, have now surged by over 300 per cent to 230,000 tonnes during January-February 2009. Further, the volume of low-priced imports ($500 and below) has consistently increased at 3.4 per cent in November 2008 to 61 per cent in February 2009.
The HR producers pointed that domestic producers can export freely to Europe, West Asia and Iran, as they are subjected to anti-dumping duty only in the US, Canada, Indonesia and Thailand. In Malaysia, importers have to seek a no objection certificate (NoC) from local producers to import HRC.
“In Europe, there is no demand, so that leaves West Asia and Iran. In the home market we have to compete with cheap imports,” HR producers said.
The average international HRC price during July-September was around $1,070 a tonne, which has now collapsed to $410-$415 a tonne. Some importers are even quoting prices between $360 and $380 a tonne. Domestic HRC prices are ruling at Rs 24,700 a tonne.
Moreover, most of the HR manufacturers have resumed normal production or are in the process of normalising. “If the dumping continues, then it will really hurt us because we cannot export,” said industry sources.
According to industry sources, Indian steel production has grown over 10 per cent in the quarter ended March. Steel makers had cut production by 30 per cent in the October-December quarter of 2008 due to poor offtake in the domestic market. However, cold rolled and galvanized steel producers, who use HR as the key input, claim that there was a supply constraint in the market.
Cold rolled producers said that HR producers were yet to resume normal production even as the traders were hoarding material in anticipation of price rise following the imposition of safeguard duty. As a result, some of the cold rolled and galvanized steel makers have hiked prices.
However, the HR producers claim that they are in a position to raise prices and have ruled out a hike even if a safeguard duty gets imposed.
