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Steel Ministry to double import duty to counter Chinese steel dumping

Chinese imports now account for nearly one-third (33%) of India’s total steel imports.

Published

1 month ago

October 7, 2024

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The Indian Steel Ministry has proposed doubling the basic customs duty (BCD) on steel imports from the current 7.5% to 15%, citing a significant surge in imports from China. This recommendation, aimed at protecting domestic steel manufacturers, was detailed in a letter sent to the Finance Ministry by Union Steel Secretary Sandeep Poundrik. The ministry’s internal assessment indicates that Chinese imports now account for nearly one-third (33%) of India’s total steel imports, posing a threat to local industry dynamics.

This is the first time the Steel Ministry has officially acknowledged the sharp rise in Chinese steel imports, which industry experts have labelled as “dumping.” The letter compares India’s situation to similar actions taken by the European Union and the United States, which have implemented safeguards to counter unfair trade practices.

The Ministry’s report highlights that many new steel capacities in the region are driven by Chinese investments aimed at export markets like India. It also raises concerns about steel shipments being diverted from ASEAN nations, particularly Vietnam, which benefits from zero customs duty under the India-ASEAN Free Trade Agreement (FTA).

The letter also points to the misuse of India-ASEAN FTAs, which are being leveraged to route cheaper Chinese steel through South Asian nations. “The current import price of steel products from China is significantly lower than domestic prices even with a 7.5% BCD. Our analysis shows that even if the duty is raised to 12.5%, Chinese steel would still undercut domestic prices,” the Steel Secretary noted.

In September 2024, the average price of hot rolled coils (HRC) in India stood at Rs 48,200 per tonne, while similar steel from China was priced at $462 per tonne, and from South Korea at $500 per tonne, according to market consultancy BigMint.
India has been a net steel importer in FY24, with imports rising by 34% to reach 3.72 million tonnes (mt) in the first five months of the fiscal year (April-August). The trade deficit for this period widened to Rs 149.11 billion, with HRC and cold rolled coils (CRC) being the primary imported categories.

The letter underscores that despite increased domestic steel production, rising imports are displacing locally produced steel, leading to market disruptions.
The Steel Ministry emphasised the need for higher import duties to safeguard domestic investments and prevent potential losses in the sector. Steel, with its significant multiplier effect on GDP (1.4x) and employment (6.8x), is a crucial component of the Indian economy. The letter warns that nearly Rs 75,000 crore of capital expenditure is “under threat” due to disruptions in the investment cycle.

The ministry’s analysis also showed that ASEAN countries currently consume around 75 mt of steel—25 mt from imports and 50 mt from domestic production. With steel production capacities expected to rise from 78 mt to 104 mt in the coming years, Chinese exports are likely to flood these markets and could be redirected to India through FTAs.

The Steel Ministry has urged the Finance Ministry to consider these factors and implement higher duties to protect the domestic steel industry from the growing influx of low-priced Chinese imports.
(Business Line)

Related Topics:Coking coal India Ministry of Steel Raw materials

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Construction Costs Rise 11% in 2024, Driven by Labour Expenses

Cement Prices Decline 15%, But Labour Costs Surge by 25%

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2 days ago

November 19, 2024

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The cost of construction in India increased by 11% over the past year, primarily driven by a 25% rise in labour expenses, according to Colliers India. While prices of key materials like cement dropped by 15% and steel saw a marginal 1% decrease, the surge in labour costs stretched construction budgets across sectors.

“Labour, which constitutes over a quarter of construction costs, has seen significant inflation due to the demand for skilled workers and associated training and compliance costs,” said Badal Yagnik, CEO of Colliers India.

The residential segment experienced the sharpest cost escalation due to a growing focus on quality construction and demand for gated communities. Meanwhile, commercial and industrial real estate remained resilient, with 37 million square feet of office space and 22 million square feet of warehousing space completed in the first nine months of 2024.

“Despite rising costs, investments in automation and training are helping developers address manpower challenges and streamline project timelines,” said Vimal Nadar, senior director at Colliers India.

With labour costs continuing to influence overall construction expenses, developers are exploring strategies to optimize operations and mitigate rising costs.

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Swiss Steel to Cut 800 Jobs

Job cuts due to weak demand

Published

3 days ago

November 18, 2024

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Swiss Steel has announced plans to cut 800 jobs as part of a restructuring effort, triggered by weak demand in the global steel market. The company, a major player in the European steel industry, cited an ongoing slowdown in demand as the primary reason behind the workforce reduction. These job cuts are expected to impact various departments across its operations, including production and administrative functions.

The steel industry has been facing significant challenges due to reduced demand from key sectors such as construction and automotive manufacturing. Additionally, the broader economic slowdown in Europe, coupled with rising energy costs, has further strained the profitability of steel producers like Swiss Steel. In response to these conditions, the company has decided to streamline its operations to ensure long-term sustainability.

Swiss Steel’s decision to cut jobs is part of a broader trend in the steel industry, where companies are adjusting to volatile market conditions. The move is aimed at reducing operational costs and improving efficiency, but it highlights the continuing pressures faced by the manufacturing sector amid uncertain global economic conditions.

The layoffs are expected to occur across Swiss Steel’s production facilities and corporate offices, as the company focuses on consolidating its workforce. Despite these cuts, Swiss Steel plans to continue its efforts to innovate and adapt to market demands, with an emphasis on high-value, specialty steel products.

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UltraTech Cement to raise Rs 3,000 crore via NCDs to boost financial flexibility

UltraTech reported a 36% year-on-year (YoY) decline in net profit, dropping to Rs 825 crore

Published

3 days ago

November 18, 2024

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UltraTech Cement, the Aditya Birla Group’s flagship company, has announced plans to raise up to Rs 3,000 crore through the private placement of non-convertible debentures (NCDs) in one or more tranches. The move aims to strengthen the company’s financial position amid increasing competition in the cement sector.

UltraTech’s finance committee has approved the issuance of rupee-denominated, unsecured, redeemable, and listed NCDs. The company has experienced strong stock performance, with its share price rising 22% over the past year, boosting its market capitalization to approximately Rs 3.1 lakh crore.

For Q2 FY2025, UltraTech reported a 36% year-on-year (YoY) decline in net profit, dropping to Rs 825 crore, below analyst expectations. Revenue for the quarter also fell 2% YoY to Rs 15,635 crore, and EBITDA margins contracted by 300 basis points. Despite this, the company saw a 3% increase in domestic sales volume, supported by lower energy costs.

In a strategic move, UltraTech invested Rs 3,954 crore for a 32.7% equity stake in India Cements, further solidifying its position in South India. UltraTech holds an 11% market share in the region, while competitor Adani holds 6%. UltraTech also secured $500 million through a sustainability-linked loan, underscoring its focus on sustainable growth driven by infrastructure and housing demand.