In Commodity News 02/06/2015
Domestic steel and aluminium companies want some quick action from the government to save them from increasing “Chinese dumping”, say industry leaders.
With a total annual capacity of 1.16 billion tonnes, China accounts for nearly 50 per cent of the world’s steel capacity.
But as the Chinese steel mills face a demand slump on the back of a tepid economy, they have been flooding world markets at throwaway prices.
Many domestic players like Tata Steel, JSW Steel and Hindalco have seen their profits come under pressure in the March quarter.
The worrying part for them is the risk of a spike in low-cost imports, as Chinese firms push their excess production to global markets.
And the domestic companies are already feeling the pressure of a dip in Chinese prices for their respective products, say industry leaders.
“Dumping has worsened our competitiveness even in domestic market,” JSW Steel joint MD Sesharigi Rao said.
Noting that rising steel imports continue to be a concern, Rao said, “domestic steel industry faced headwinds of a 71 per cent surge in finished steel imports especially from China, Korea, Japan and Russia in 2014-15, when apparent consumption rose only 3.1 per cent during the same period.
“JSW Steel has taken up the issue with the government and sought appropriate steps to stop dumping by China. It wants the government to check quality of Chinese products, Rao said.
Tata Steel India and Southeast Asia managing director T V Narendran said steel realisations fell sharply during the second half of FY15 due to the deluge of imports combined with sluggish domestic demand.
“The dumping of Chinese aluminium also having huge impact. With Chinese GDP growth expected to be lower than that of India’s, manufacturing growth will be even slower. If the economic growth doesn’t take place and production doesn’t stop, then Chinese will try to dump more, which will have serious impact on all manufacturers outside China,” Hindalco managing director D Bhattacharya said.
He further said the Chinese government also gives export incentives to even export which is not exportable.
They are encouraging people to dump aluminium in countries outside China, Bhattacharya said.
In March, the European Union had imposed anti-dumping duties for six months on some steel imports from China and Taiwan.
The local industry also seeks similar kind of action immediately from the government.
The Finance Ministry is in talks with the steel ministry to ascertain whether rising imports merit fresh measures like imposing an dumping duty or raising Customs duty to discourage imports mostly by secondary steel makers.
In the Budget 2016, the government had announced the possibility of increasing import duty for finished and semi-finished steel to 15 per cent from 10 per cent as a cushion to steel producers.
