In order to restrict cheaper flat steel imports in to India especially from China, Japan, Korea and CIS countries, Indian government have imposed two trade barriers within the time span of one year:
1.Imposition of safeguard duty on HRC
2.Announcement of MIP for six months till 4 Aug’16
In a recent update in safeguard duty case on HRC, the provisional safeguard duty of 20% which was valid for 200 days till 31 Mar’16 has been extended by the government for three years till March 2018.
After the MIP announcement in Feb’16, prices of flat products have increased effectively by INR 4,500-5,000/MT and further hike is expected in coming months.
However,in an effort to restrict unreasonable price hikes by Indian steel majors, government has decided to phase out safeguard duty if cargoes are imported at or above MIP.
Thus as per SteelMint analysis, the landed cost of HRC import at MIP, without safeguard duty will be much lower than what it would have been if safeguard duty continued.
Landed Cost of HRC Import
| Particulars | Price in INR/MT | Price in USD/MT |
| CIF in INR/MT) | 29,370 | 445 |
| Assesseable value | 29,664 | 449 |
| BCD (Basic Customs Duty) | 237 | 4 |
| Safeguard duty if applicable | 0 | 0 |
| Countervailing duty @ 12.5% | 3,738 | 57 |
| Central Excise Education cess | 79 | 1 |
| Customs Education cess | 40 | 1 |
| Total | 33,758 | 511 |
| Interest cost | 250 | 4 |
| Warehouse charges | 500 | 8 |
| Port Handling charges | 1,201 | 18 |
| Total Landed cost of Import | 35,709 | 541 |
*BCD from Japan & Korea is applicable @ of 0.8%
Exchange rate: 1 USD = INR 66
Source: SteelMint Research
In the above table, we have considered HRC imports from Japan and Korea as India’s majority HRC import is booked from the above two countries.
Also due to FTA (Free Trade Agreement), customs duty levied on steel imports from both the countries is in the range of 0.8 to 1.25%.
It can be observed from the above table that without safeguard duty, the landed cost of HRC import stands at INR 35,709/MT.
Currently 2.5mm HRC is being offered in the range of INR 34,000-34,500/MT on an average basis across India. Thus, the landed cost of HRC import without safeguard duty is almost equivalent to the HRC prices prevailing in the domestic market.
The domestic flat steel participants are anticipating further price hike by the manufacturers in the month of April.
Now the big question that hover our minds is that whether manufacturers will opt for further price increments or the price rally will break and prices will plunge down once again.
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