Hit by flooding of cheap products from China, Korea and CIS nations, the domestic steel industry has upped the ante for another dose of increase in import duty.
Buckling under pressure from Indian manufactures to safeguard their interest, the Centre sometime ago enhanced the import duty on stainless steel mainly used for automobile and white goods from 7.5 to 10 per cent. Not happy with meagre hike, Indian Steel Alliance, an umbrella body for major steel producers, sought further increase in duty to discourage dumping of products in domestic market.
Ironically, steel prices have not firmed up since mid-2012. Even as capacity utilisation has not been ensured, many have gone for capacity expansion in anticipation of buoyancy in the market.
Industry sources told that China has added 80 million tonne capacity in past two years whereas worldwide there is an excess capacity of 300 million tonnes. Such a structural imbalance might further worsen the market conditions. China steel is less than Rs.5,000 to Rs.7,000 per tonne than Indian steel.
China is contributing almost 90 percent of wire rod and rebars available in the market. “The market meltdown in China and Greece financial crisis may lead to more focus in Indian market by Chinese steel producers,” an official of public sector steel company said.
Depreciation of their currency has led to imports from Korea, Ukraine and Russia. “There is no signal that the economy will recover in the near future. People have no purchase power and the manufacturing sector is gloomy notwithstanding tall claims by Prime Minister Narendra Modi,” CITU general secretary and CPI (M) MP Tapan Sen told.
Though the country’s target is to achieve a capacity of 120 million tonnes by 2020, the production is pegged at around 45 to 50 million tonnes. “The industry needs a stimulus package in the form of tax SOPs and heavy curbs on imports,” Mr. Sen said.