India's anti-China steel tariffs bite engineering, manufacturing firms

Jayaswal Neco Industries

03/08/2016 08:41

* New Delhi to decide soon whether to extend tariffs past 
Aug 5 
    * Engineering sector sees 10 pct export drop if tariffs 
extended 
    * Cold rolling steel mills shutting down, operating at 
losses 
    * Anti-dumping body recommends further duties on hot-rolled 
steel 
 
    By Sankalp Phartiyal and Promit Mukherjee 
    NEW DELHI, Aug 3 (Reuters) - Indian manufacturers of 
finished steel goods are urging New Delhi to end tariffs on 
cheap imports of the alloy from China, Japan and South Korea, 
worried the protectionist measures may cost them billions in 
lost overseas sales.  
    India put the tariffs in place in February to ensure a 
minimum import price (MIP) for 173 steel products, mainly to 
guard against cheap Chinese exports of around 10 million tonnes 
a month of items such as hot-rolled and cold-rolled steel that 
have undercut U.S., European and Asian producers.  
    The gambit to protect India's domestic steelmakers is 
threatening export revenues earned by engineering and 
manufacturing companies as artificially high prices for a 
primary raw material for everything from home appliances to 
ships make their products uncompetitive in foreign markets.  
    The MIP policy has hit engineering firms especially hard. 
These mostly small- to mid-sized companies together export goods 
worth $56 billion a year - a fifth of India's shipped 
merchandise - made at least partly with steel now priced 15 
percent higher on average than at end-2015 and up to 30 percent 
more than Chinese imports.  urn:newsml:reuters.com:*:nL3N15K506  
    "My input cost is 40 percent higher than other nations. How 
will my finished product compete?" Pankaj Chaddha, CEO of Jyoti 
Steel Industries, said of the MIP tariffs.  
    Jyoti Steel, a Mumbai manufacturer of stainless steel wire 
and carbon steel bright bars, cut 50 of its 300 jobs after MIP 
was introduced, and its output slumped by 22 percent in the 
April-June quarter.  
    Chaddha said he would have to lay off another 50 contract 
workers if the policy was extended past its Aug. 5 expiry date. 
    Also hanging over India's steel sector is a separate 
recommendation that the government enact anti-dumping duties on 
imports of hot-rolled steel products from China, Japan, South 
Korea, Russia, Brazil and Indonesia.  urn:newsml:reuters.com:*:nD8N18S02H  urn:newsml:reuters.com:*:nD8N14Z01K 
     
    COLD-ROLL STEEL MILLS SHUT DOWN 
    Indian prices of hot-rolled steel - used to make pipes, 
rods, cars, ships and industrial machinery - rose by more than 
15 percent to 37,000 rupees ($554) a tonne between December and 
early May, according to the latest data available. 
    Chinese prices moved from $270 a tonne in December to $420 a 
tonne in April, before softening again.  IRONORE/   
    Trade body EEPC India said engineering goods exports would 
drop 10 percent this year if MIP is extended. The group has gone 
before the trade ministry several times to ask that the import 
policy be allowed to lapse, and members have also met with the 
steel ministry on the issue.  
    India's indebted steel sector, though, struggling with low 
profit amid a global supply glut, has lobbied hard for it to be 
kept in place.  urn:newsml:reuters.com:*:nL3N17Z2JI  urn:newsml:reuters.com:*:nD8N18S02H  urn:newsml:reuters.com:*:nL4N1904F2  
    By making foreign steel too expensive, domestic steelmakers 
such as Steel Authority of India  SAIL.NS , Tata Steel  TISC.NS  
and JSW Steel  JSTL.NS  have been able to raise prices.  
    But higher prices, besides hampering exporters, have pushed 
steel processing firms such as Adhunik Metaliks  ADME.NS , 
Jayaswal Neco  JAYN.NS  and Sujana Metal Products  SUJM.NS  into 
losses.  
    About 20 of 60 mills on his membership list have shut, said 
S.C. Mathur, executive director of Cold Rolled Steel 
Manufacturers Association of India. 
    "Others are operating at 40-50 percent of capacity and 
incurring losses."  
     
    NOT JUST INDIA VS CHINA  
    China, the world's largest steel manufacturer and consumer, 
produced 804 million tonnes last year - about half of global 
supply - using just 70 percent of its capacity.  
    India - along with the United States, Europe and others - 
has said that even as Beijing works to downsize its overblown 
sector, Chinese mills are exporting their excess supply. 
 urn:newsml:reuters.com:*:nL1N1AF1A3  urn:newsml:reuters.com:*:nL1N19E0Q3  urn:newsml:reuters.com:*:nL8N19E2ZL 
    India, the world's third-largest producer with an estimated 
output of 90 million tonnes, consumed about 80 million tonnes of 
finished steel in the year through March 2016.  
    It imported about 11 million tonnes that year, according to 
the steel ministry's Joint Plant Committee (JPC), with China 
supplying around 47 percent.  
     
    ($1 = 66.7428 Indian rupees) 
 
 (Additional reporting by Ruby Lian in SHANGHAI and Henning 
Gloystein in SINGAPORE; Editing by Tom Hogue) 
 ((sankalp.phartiyal@thomsonreuters.com; +91-11-49548033; 
Reuters Messaging: 
sankalp.phartiyal.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA STEEL/