Minimum probable steel import price

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The struggling domestic steel industry will receive another layer of protection with the National Democratic Alliance government expected to notify a minimum import price (MIP) for steel products later this week. Products in less than 14 categories would have different rights for basic and special qualities.

The Commerce Department will likely issue a notification for the imposition of the PMI, which would set the floor price, below which imports into the country would not be allowed. A person in the know said the Commerce Department has asked the Steel Ministry to reduce the number of items, so that the entire range is not covered. The government previously imposed a 20 percent provisional safeguard duty on hot-rolled coils.

Last week, the Ministry of Steel sent a comprehensive list of 14 categories with around 40 products to the Ministry of Trade and Industry. These include pig iron, heavy molten and crushed scrap, semi-finished products, quarto sheets, cold rolled coils, coated steel flat products, all kinds of steel pipes and tubes. , stainless steel flat rolled products, bars and rods, among others.

The government is likely to put in place a mechanism according to which if the free on board price at the point of origin according to the main steel indices is lower than that invoiced, the displayed price would be taken into account for the application of the MIP.

The Commerce Department would, however, exempt product exporters from the MIP standard if the imports were used to manufacture export products. To avoid abuse, the department is considering a mandatory export obligation within six months, in addition to reimbursement of the actual value and the PIM.

Articles 3 and 5 of the Foreign Trade (Development and Regulation) Law and Article 11 of the Customs Law allow notification of such a threshold price. The MIP is defined as the equivalent of the overall weighted average price of a product and the price without injury obtained during safeguard and anti-dumping proceedings, whichever is lower.

Steel companies had accumulated losses of Rs 4,238 crore in the September quarter, compared to Rs 4,647 crore in the period last year. The Steel Authority of India made its highest ever profit before interest, taxes, depreciation and amortization of 3,900 crore rupees for every tonne of steel produced in the second quarter of this fiscal year. In addition, 145 steel companies have accumulated debt of Rs 2.98 lakh crore and an unfavorable debt-to-equity ratio of 1.27, according to a report by CARE Ratings.

A person close to development said India was one of the few countries where demand for steel products was on the rise but businesses were losing out. “Domestic demand is expected to grow 7.3% this year, but the industry is in decline due to predatory pricing from Korean, Japanese and Chinese companies,” he said. According to data from the World Steel Association, global demand for steel this year is minus 1.7 percent. In China, it’s minus 3.5 percent, South Korea is minus 1.3 percent, and Japan is minus 5.4 percent.

Up to October of this year, seven million tonnes (mt) of steel were imported compared to 5 mt in 2013-14. Imports are expected to reach 15 million tonnes this year. “The predatory rate and prices are cause for concern. The government wants to make the industry a net importer of steel,” a senior official said.

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