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Cheap Chinese steel to continue to haunt Indian producers – Assocham

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Troubles within China are expected to spell disaster for the Indian steel industry as desperate Chinese manufacturers would dump their products more rigorously abroad, having already registered a growth of 232 per cent in their shipments to Indian ports, an ASSOCHAM study has cautioned.

Indian steel makers have already been hit by declining prices due to heavy imports from China.

“China has got 400 million tons of surplus capacity against a demand of 741 million tons which is more than 50% of its requirement. Excessive capacity of China is four times the total capacity of India and in 2014, steel exports from China were 93 million tons in total, increasing by 50.5% year-on-year,” the ASSOCHAM paper said.

India’s steel imports have increased by over 71% in 2014-15 (vs 2013-14) and trade deficit only in terms of steel has widened by USD 3.66 billion. Specifically, China’s steel imports coming into Indian in 2014-15 surged by over 232% and the trade deficit with China alone widened by USD 2.66 billion.

India’s imports of defective steel and seconds increased by 30% in 2014 -15. Such imports of HR alone witnessed a sharp rise of 99% along with CR rising by 81%.

Further with further devaluation in Yuan, the impact is being felt on Australian, Taiwanese and Japanese currencies as well. This would make Chinese exports cheaper creating more room for their surplus steel in growing markets like India, it said.

Moreover, defective and second steel is being dumped into India to the detriment of our construction and health of people.

Tin plate exhibits an example of rising defective steel and need for strict quality compliance. Out of the 16 categories published in the Draft notification for Quality Control Order, 2015, Tin plate is very critical, as it is widely used for packaging of food items, Industrial goods, Pesticides, stationery and toys. Presently a lot of substandard quality of tin plate is being imported at very cheap prices and being utilized in Packaging industry.

Due to absence of adequate quality standards on imported steel, China was able to cleverly disguise its commodity grade steels as Alloy-Steel by adding 8-ppm i.e. 0.0008% or more of Boron. In this manner it was able to penetrate into the Indian market and also en-cash the benefit of Export-Tax-Rebate ranging between 9% to 13%.

“Globally, countries which have become the victims of surplus, cheap and non-standard steel from steel-surplus nations are seeking various kinds of trade remedial measures on steel imports mainly from China, Japan and Korea”, said ASSOCHAM Secretary General Mr D S Rawat . He said there are over 400 trade actions taken across the world with majority focused on China. Every country has become a prey to China’s unfair exports and have been taking safeguard, anti-dumping or CVD route to counter the surplus steel entry.

“However, the Indian steel industry has not been able to implement a single action till date for carbon steel. India’s only action (TBT) in form of the quality order on 16 steel products is still pending and awaiting recommendations on the WTO website. The delays are hurting the steel industry which is not able to compete with the cheap steel being exported from China to Indian end users”, the chamber said.

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