India: MIP will have Limited Impact as Global Prices Rise

In a surprising move, the commerce ministry has extended minimum import price (MIP) on 66 steel products, including semis, bars and rods for another two months till 4 Dec’16, even as the steel ministry wanted the extension for just 21 coated products only.

The move, issued by the Directorate General of foreign trade, last evening, however, will not benefit importers of these products, particularly the semis, as international prices are ruling higher than MIP of USD 341-362/MT. Moreover, the government has already proposed provisional anti-dumping duty on 15 wire rod of alloy or non-alloy products last week.
 
The domestic industry has already sought protection in the form of anti-dumping duty on these 21 coated lines, which are under investigation of anti-dumping.  
 
These 66 products were part of the first MIP imposed on 173 items in February for six months, mainly to counter burgeoning imports from countries like China, Japan, and Korea. Subsequently, in August, the government pruned the number to 66 pushing 107 products under the ambit of anti-dumping measures.

While MIP is a short-term measure, anti-dumping measures are also WTO-compliant and have the far-reaching impact. India has also drawn flak from various countries in the WTO forum for imposing MIP.  However, imports could largely be contained since these measures come into place providing much relief to the debt-ridden domestic industry.
 
Indian Steel Association has been asking for the continuation of MIP for another six months till March on the ground that if withdrawn, imports at predatory prices could again start leading to a glut in the domestic industry.
 
India is neither against imports nor exports; it just does not want foreign companies to sell products in India below their cost of production. The government senses that the demand for steel would go up in sync with the growth in investment in infrastructure and housing.

Current MIP and Market Prices

Price in USD/MT
Source: SteelMint Research