India is the latest country to cry foul over the dumping of cheap imports by Southeast Asian countries in what is being dubbed as a “mini-war” in global trade.
In the last month or so, steel producers from around the globe have already exchanged accusations of rivals in foreign lands dumping cheap metal into their markets. The countries at which fingers are being pointed are not only China, but also Russia, Ukraine and Korea.
Now, it’s the Indian steel producers’ turn to cry foul. Last week, The Business Standard reported on how the Comprehensive Economic Partnership Agreement (CEPA) is proving to be a new headache for Indian steel producers, who are already struggling with other problems beyond anti-dumping issues such as shortages of iron ore and skittish prices. They are now demanding that steel products be kept away from such Free Trade Agreements.
Major Indian steel producers point to the surge in the imports of hot rolled coil (HRC) from Korea (125%) and from Japan (72%), in 2011-12 over the previous year, to back up their allegations. Some head honchos of these steel firms informally met some top Indian government officials here earlier this week, with a request to take another look at the trade agreements.
Even trade bodies like the Federation of Indian Chambers of Commerce and Industry have been apprised of the situation and are said to be tracking the situation. With no end to the “cheap imports” in sight, steel producers laid emphasis on the government instead of seeking more Foreign Direct Investment (FDI) for the sector.
The Indian scenario seems to be a copycat version of what’s happening in many nations today. China, Russia, Ukraine, Japan — the list is long, due to the worsening world economy and over-capacity in the steel industry. In many markets, the imported steel is being dumped at even lower than the production costs. The global steel industry is already hunkering down for a fresh round of closures and trade disputes.
Just a few days back, Reuters reported that Australia’s largest steelmaker, Bluescope Steel, had launched an anti-dumping lawsuit against imported hot-rolled coil from Japan, Taiwan, South Korea and Malaysia.
In India, nobody’s talking of approaching the courts yet, but the industry is miffed at the prospect of cheap imports further cutting into their already dangerously low bottom lines. Several companies from Japan — Kobe, JFE, Sumitomo and Nippon — are either part of the India story, or are actively looking at it, while South Korea’s Posco may take off soon.
Indian counterparts, who are now hopping mad and already talking of job losses, frown upon added incentives for such companies to sell steel in India.
The Business Standard story quoted Jayant Acharya, director, Commerical and Marketing at JSW Steel, as saying that the trade pacts were not helping India, and were affecting the steel industry adversely. Acharya was also of the opinion that FDI in this sector must be encouraged.
Recently, the Indian government increased the import duty on most steel products between 5-7 percent. But Korea and Japan were left out of this because of CEPA. The import rate is subsidized at 3.125 percent for Korea, while Japan attracts 3.3 percent for 2012-13. The rate will be reduced to zero by the beginning of 2017.
Sohrab Darabshaw contributes an Indian perspective to MetalMiner.