Extension of anti-dumping duty will be a near-term positive for domestic flat product manufacturers, a report said here.
The Government on February 7 extended the validity of provisional anti-dumping duty (ADD) imposed on hot rolled coils (HRC) and cold rolled coils (CRC) by two months.
Domestic HRC manufacturers will now get the protection of anti-dumping duty (ADD) till April 7, and those producing CRC will get protection till April 16. The imposition of ADD, along with safeguard duty (SGD) and minimum import price (MIP) have resulted in a 37 per cent YoY de-growth in India's steel imports during April-December of FY2017, after rising steeply by 26 per cent YoY in FY2016 and 71 per cent YoY in FY2015, the rating agency ICRA said in its report.
In fact, this decline in steel imports has coincided with a strong growth in steel exports by domestic mills, supported by an improvement in the pricing scenario in international markets. This has helped bridge the gap between India's steel imports and exports to just 0.52 million tonne (MT) during April-December FY2017 against a much wider 7.64 MT during FY2016, the report said.
Jayanta Roy, Senior Vice President and Group-Head Corporate Sector Ratings, ICRA said: "With domestic steel demand growing at an anaemic rate of 3.4 per cent in 9-months of FY2017, this sharp decline in steel imports has helped domestic steel mills regain some lost market share. Moreover, with around 80 per cent of India's steel imports taking place in flat product category, extension of ADD remains a near-term positive for domestic flat product players."
Given the 35 per cent rise in Chinese export offers of HRC and CRC between April and February of FY2017, the current landed price of imports is higher than the notified level stipulated for imposition of ADD, for HRC and CRC, the threshold landed price is USD 474/MT and USD 594/MT respectively.
"Therefore at current international prices, the
provisional anti-dumping duty does not kick in. Nonetheless, given the large volatility witnessed in international steel prices in the last two years, the extension of ADD would provide a floor to domestic flat steel prices against any shocks in international prices in the immediate term," Roy added.
The Union Budget for FY2018 has stressed investments in steel consuming sectors including infrastructure and affordable housing, which has the potential to generate significant incremental demand for steel in the country if such projects are implemented efficiently. However, any significant and immediate pick-up appears uncertain as of now, given the weakness in India's steel demand conditions otherwise. In such a scenario, the extension of ADD would give some relief to domestic flat product manufacturers in the coming months, the report said.
