'Government's extension of anti-dumping duties is likely to be credit positive for Indian steel industry'

Highlights:

1. The Government of India on February 7 announced extension of the provisional anti-dumping duties on certain hot-rolled and cold-rolled flat products of alloy or non-alloy steel from countries including China and South Korea by another two months until April 2017 

2. The government had put in place the initial anti-dumping duties on August 17, 2016 for a period of six months 

3. Moody's Investors Service and Care Ratings have said that the government's anti-dumping measures to safeguard the steel industry has been successful resulting in decline in steel imported into the country 
 
 
 

The government's latest move to extend the anti-dumping duties on certain steel products imported from some countries to safeguard the Indian steel companies from cheap imports is projected to be credit positive for the domestic steel industry, said Moody's Investors Service and Care Ratings in their latest research reports.

The Government of India on February 7 announced extension of the provisional anti-dumping duties on certain hot-rolled (HR) and cold-rolled (CR) flat products of alloy or non-alloy steel from countries including China and South Korea by another two months until April 2017. 

The government had put in place the initial anti-dumping duties on August 17, 2016 for a period of six months. 

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"The extension of anti-dumping duties is credit positive for Indian steelmakers as it will continue to protect them against cheaper imports from other Asian countries and reduce exposure to domestic price volatility. Such provisional anti-dumping duties also represent a progressive move towards more permanent measures. We expect India to adopt more long-term duties once Directorate of Anti-Dumping and Allied Duties (DGAD) completes its investigation into whether countries dumped steel into India," Moody's Investors Service said in a research note on Friday. 

According to Moody's, the government's anti-dumping measures to safeguard the steel industry has been successful resulting in decline in steel imported into the country. 

"Average monthly steel imports into India fell nearly 37% to around 0.67 million tonnes (MT) during April-December 2016 from more than 1 million tonnes (MT) in the year ended March 2016, reflecting in part the success of protectionist measures at curbing imports, and a much better operating environment with a recovery in global and regional steel prices," cited Moody's in a research note. 

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However, the ratings agency has cautioned that the Indian steel companies will remain exposed to imports from other Asian countries.

"Indian steel companies remain exposed to imports from other Asian countries.The continuation of government measures to protect the domestic steel industry is therefore imperative, especially with global and regional overcapacity," Moody's said.

Echoing similar views, Care Ratings too believes that the government's recent move will benefit the steel industry.

According to Care Ratings, of the total steel imported in the country during 2015-16 imports of hot-rolled (HR) and cold-rolled (CR) coils was 47%. 

"After imposition of these duties (August 2016) the imports of HR and CR coils has come down and in April-October 2016, the share of these HR and CR coils was around 36% of the total steel imported during the period," cited Care Ratings in a research note on Thursday. 

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"With this share of hot-rolled (HR) and cold-rolled (CR) coils in the total steel imports, the move to extend the anti-dumping duties on hot-rolled (HR) and cold-rolled (CR) flat products of alloy or non-alloy steel will benefit the industry," it further said.

The rating agency expects the government to further impose the long-term anti-dumping duties on up to 124 steel products before the expiry of the temporary anti-dumping duties period. 

"If the government considers imposing long-term anti-dumping duties on up to 124 steel products, the industry will continue to get protection from the government," Care Ratings said in a note. 

However, it further added that it cannot be expected that this protection will last forever and the industry has to gear itself to face competition in the normal course. 

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