With the latest duty hike, import duty on flat steel products has risen to 12.5 per cent from 10 per cent and that on stainless-steel bars, rods and wires to 10 per cent from 7.5 per cent. Earlier in June, the government had raised the levy on some steel products by 2.5 per cent.
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Chinese steel shipments surged 27% to 62.1 million metric tonnes, while aluminum shipments rose 28% to 2.9 million tonnes in the first seven months of the year, the highest ever for the period, and two-thirds of the record 93.8 million tonnes in 2014.
A weaker yuan will make Chinese steel products even cheaper overseas as Beijing’s surprise move to devalue its currency gives the country’s exporters leeway to cut prices. Steel industry executives believe that the yuan devaluation will result in further imports from the world’s biggest producer of steel and aluminum. So steelmakers would have to apply separately for dumping duties on steel imported from different countries.
Ruling out any price increase now, he said if no further action is taken by the government soon, steelmakers may have to slash production, or produce more and loose more. On the other hand, Rashtriya Ispat Nigam Limited (RINL) recorded 4.2% yearly drop in production during the quarter.
“Almost 20 per cent of Indian steel demand is from imports, which is very disturbing and destabilizing”. Moreover, it will not apply to items from free trade agreement (FTA) countries from where we are facing the threat of imports.
China is by far the world’s largest steel consumer and producer, accounting for about half of the world’s output.
An official with JSW Steel said Chinese exports were already causing a disturbance in pricing and also in the overall supply-demand dynamics in the global market.
The yuan has fallen nearly 4 per cent in two days since the central bank announced the devaluation on Tuesday, but sources involved in the policy-making process said powerful voices inside the government were pushing for it to go still lower. Import duty on flat steel products was increased to 10% from 7.5%, while for long steel products it was raised to 7.5% from 5%.
This year, trying to offset weak domestic demand, China already encouraged its refined commodities producers to increase exports.
“It adds to the pressure that Chinese steel exports are going to remain an issue for the rest of the global steel industry to deal with”, said CLSA commodity strategist Ian Roper.
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Yuan per dollar breaking three-year support. This will also offset the potential gains for the end users in sectors such as construction, infrastructure, and engineering due to devaluation in the Chinese currency.
