Indian Steel Makers to Benefit from Anti Dumping Imposition : Fitch

Definitive imposition of anti-dumping duties and preferential procurement of domestic steel by government, will improve the outlook for demand and profitability for Indian steel producers, rating agency Fitch said in a report.

Having found that predatory imports were causing material injury to the domestic firms, the government has imposed definitive anti-dumping duties on hot-rolled and cold-rolled flat-steel products from several countries including China, Japan and South Korea in the range of  USD 489 -576/MT.

Fitch said these products used to form over 55% of India’s finished steel imports in the 21-month period from April 2015 until December 2016. Tata Steel and JSW Steel are well placed to benefit from anti-dumping duties since around 75% of their capacity is  for production of flat products.

“We think the anti-dumping duties reduce the risks to selling prices and brighten the outlook for profitability, amid prevailing global overcapacity,” the rating agency said.

However, a rise in prices to above the level specified by the anti-dumping duties in response to a rebound in input costs, would expose Indian steelmakers to margin pressure from imports, it added.

International steel prices have been volatile recently, with China domestic spot HRC prices rising to around USD 550/MT in early 2017 from around USD 420/MT in September 2016, as the input cost of coking coal jumped. It has now declined to below USD 450/MT in May 2017 with the moderation in coking coal prices.

The Indian Anti-dumping duties will not be imposed if the landed value of imported products is higher. The duties are in place until August 2021, and provide long-term protection for the Indian steel mills.

Meanwhile, it said preferential procurement by government, based on a minimum domestic value addition requirement of 15%, improves the demand outlook for manufacturers over the longer term.

Around 65% of steel in India is consumed by the infrastructure, construction and rail transport sectors which are being driven by public-sector investment.