Tata Steel, JSW have divergent views on import

With India seeing higher steel imports once again, two of the country's major domestic producers hold diamterically opposite views on protective measures that need to be undertaken as well as the import scenario of the commodity.

While Sajjan Jindal-led JSW Steel sees the need for stronger measures to clamp down surging inflows of the alloy, Tata Steel managing director and CEO, T V Narendran says, “What the government has done so far is enough.”

India, the world’s third largest steel producer, became a net importer in FY18 as 8.4 million tonnes sailed into the country, up 15 per cent from same period last year. During the same period, exports of the commodity dropped 29 per cent.

Imports of finished products increased by 30 per cent in the April-June quarter from the same period last year. At present, the reference price for hot-rolled is $485 per tonne while global steel prices have moved above $600 per tonne making the reference price ineffective.

Out of the 8.4-million tonne imported last year, 51 per cent imports were from free-trade agreement (FTA) countries such as Japan, Korea and other Asean nations which have zero per cent import duty, said industry officials. Mills in these countries have redirected supply after US President Donald Trump slapped an import duty on the commodity earlier this year, they said.

Domestic steel industry currently imposes anti-dumping duty on various products, including hot-rolled flat products originating in or exported from some countries including China, Japan and South Korea, for five years until August 2021. The duties were imposed in May 2017 to provide long-term protection to Indian steel mills.

“We are seeing imports of colour-coated steel products from the Asean region, where China is routing the material to India via Vietnam where it gets value added with cheaper coating. This is not meeting Bureau of Indian Standards (BIS),” Seshagiri Rao, managing director and group chief financial officer of JSW Steel told reporters at its earnings conference recently.

China, the world's largest producer and consumer of steel, had played spoilsport in 2015-2016 as it dumped excess steel across world markets hurting nearly all geographies, including India. It was the impact of these Chinese cheap imports that the government laid series of protective measures for the domestic steel industry, eventually settling for the long-term antidumping duty for a five-year period. “The way steel imports are rising, the 2016 situation can repeat. There is a threat that dumping may happen the way it did in 2015 and 2016,” Rao said.

Meanwhile, Narendran of Tata Steel is at the other end of the spectrum.

“What happened in 20152016, I do not see it repeating because China has also taken action. Chinese environment conditions are stringent now. Our bigger concern was from smaller steel players and not big Chinese players like us in India. Most of the small mills have either aligned themselves with green norms or have had to shut down. What happened in 2015 was last seen in 2003. I do not see it happen anytime soon,” added Narendran.

“Domestic industry needs safeguard duty or fixed price mechanism from the current reference price mechanism,” said Jayany Acharya, director commercial of JSW Steel.

Narendran, however, sees prices not being so relevant as international rates itself are quite high.

“But it is good to have a protection for the downside so that it allows a good protection. It should not be that somebody else’s problem (China, Korea) is ending on your door step. I do not see the need for additional measures. Under the current business conditions, good companies are profitable and will continue to be so,” said Narendran. India has a total installed capacity of 130 million tonnes, while its annual consumption is close to 105 million tonnes.