Indian steelmakers seek extension, expansion of minimum import prices
Primary steel producers in India want the country’s minimum import price (MIP) regime to last beyond August 5, 2016, and to be expanded to include steel products not covered by the current regulations.
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The regulations are due to expire on August 5 this year.
“There is a clear justification and an immediate need to extend and expand MIPs,” JSW Steel ceo Seshagiri Rao said on Thursday July 28.
JSW Steel expects the government to provide protection for the local steel industry against dumping of steel and predatory pricing, Rao said, in the same way as most countries around the world are doing through remedial trade measures.
Rao also called for stricter implementation of MIPs to curb circumvention of the rules by importers.
“Following the introduction of MIPs, it was seen that the reduction in imports was not as much as it should have been,” he claimed.
“Rebar was included in the MIP regime but it continued to be imported under HS code 7228. Similarly, some grades of wire, pipe-grade slab and hot rolled coil continued to be imported, which should not have happened after imposition of MIPs,” Rao said.
“Therefore, there is a need today not only to extend MIPs but also to expand MIPs, and to implement [the duties] strictly so that import volumes come down,” he added. The need for this was acute now, he said, because the Indian steel industry is not competitive and steel demand domestically is not very strong, while domestic supply is increasing.
MIPs were introduced in early February this year.
“We expected imports to come down by at least 50%, but in April-June they came down by only 27%,” Rao said.
Government-owned Sail, India’s largest steel producer, has also asked for the MIP rules to run beyond August, steel minister Chaudhury Birendra Singh said.
According to a senior official from Essar Steel, MIPs must be extended as they apply to material from all countries, unlike an anti-dumping duty which is specific to named countries and exporters.
“Anti-dumping is not enough to provide protection to the Indian domestic steel industry from all countries. If MIPs are not extended, it will create a problem of dumping of steel by countries other than the six countries targeted by anti-dumping actions,” the official said.
According to the Essar official, around 860,000 tonnes of steel was imported in April-June even though MIPs were in force, and 580,000 tonnes of this material was at prices below the MIPs.
“The surge in imports below MIP demonstrates that MIP has been circumvented either by extending LCs [letters of credit] or through imports under the advance authorisation scheme, and then regularising these with the licensing authorities through a nominal interest payment, thereby avoiding the need to export,” the official said. “As a result, domestic prices remain under stress.”
However, importers have claimed that most of the imports below MIP levels were booked before February, and that they had opened enough LCs before February 5 – the date when MIPs were introduced – to be allowed to import at prices below MIP.