Steel imports continued to remain at the elevated levels for the fourth consecutive month this fiscal even as India remained a net importer for the first four months of this fiscal.
Despite being the world’s second largest steel producer, India imported 2.69 million tonne of steel between April and July, and exported 1.57 mt, as per the government data.
With the developed countries imposing high trade barriers, China tapped more into Indian markets and was the highest steel exporter at 8.07 lakh tonne between April and July. It was followed by Japan and South Korea, the data showed.
Some of the leading global automobile companies with manufacturing base in India have been importing steel from their own country and this has left leading domestic steel manufacturers high and dry.
Amid growth stress, the Indian Steel Association had filed a petition against cheap hot-rolled coil imports from Vietnam and the Director General of Trade Remedies has started an anti-dumping investigation into HRC imports of alloyed and non alloyed steel from Vietnam.
ICICI Securities said that while the move is a positive step, the effect will be limited as China is the major exporter of steel to India and not Vietnam. The report also says the investigation could be reciprocal as Vietnam also started an anti-dumping investigation into steel imported from India and other countries.
Prices crash, cost up
The dumping of steel by China comes at a time when steel prices in India have plunged to its lowest level in more than three years.
Notwithstanding the fall in prices, the cost of operations for steel and other metal companies are set to go up with the Supreme Court allowing State governments to levy tax on ores mined from their respective States.
The apex court has allowed States to impose taxes on minerals and land holding minerals retrospectively from April 1, 2005.
The windfall for mineral-rich States such as Jharkhand, Odisha, Chhattisgarh and Rajasthan will cost the industry about ₹2 lakh crore while the public sector undertakings would face a ₹70,000 crore-odd hit.
However, the apex court ordered that mining companies can make the payments to the States over the next 12 years, commencing from April 1, 2026.
Most of the large steel producers such as Tata Steel, JSW Steel, and Jindal Steel and Power have their own captive mines and are all ready paying royalty and other State levies.
Fitch Ratings said steel and mining companies were more at risk from state-imposed taxes than other sectors such as power and cement companies operating in the mining industry.
“Metal and mining companies have limited ability to pass on the potential increase in operating costs, as their products track global prices,” Fitch said.