22 February 2016

Producers of India continue to worry about imports

In early February, the Indian authorities set a minimum cost for 173 types of imported rolled products and semi-finished products. This is about 80% of the domestic imports of steel products. National producers are generally satisfied with the concern of the government. At the same time, the threat to the Indian metallurgical sector is still topical. Those types of rolled products that are not included in the list continue to constitute a fierce competition for national products.

Of particular concern is the production, contracts for the supply of which were signed before 05 February. Thus, this product does not affect the import minimum prices. The same situation is observed with regard to revolving credit lines. They are opened for importation of lots of homogeneous products. A variant is possible when the importer does not revise either the volume of the lot, the total cost , or the specification. The credit line is extended indefinitely until the end of the agreement. As a result, the cost of shipments to the country is below the minimum prices.

This scheme was used in April-December last year. During this period, about 3 million tons of steel were imported to India in a similar way. The scheme considered was very convenient. It eliminated the problems that are possible with the licensing of each independent party. It is not ruled out that in the fiscal year 2015-16 the volume of such supplies will be about 4 million tons. By the way, when considering the minimum cost of production, revolving credit lines were not even discussed. However, this is not surprising. This financial instrument for the Directorate General for Foreign Trade is new.

In September 2015, protective duties affected hot rolled coil products. At the same time, the import of rolled steel that met API standards began. Its main purpose is the production of oil and gas pipes. This product is not subject to protective duties or minimum prices. Actually, in September there was no need for this product. Indian companies produced it in sufficient quantities. However, in November last year, the import of products was 23,000 tons. In January, shipments totaled 60,000 tons. The volumes of the current financial year may reach the level of 500,000 tons. And this despite the need to provide certificates on the subsequent application of products. Also, restrictions do not affect a number of imported items. Their volume in 2015-16 fiscal year is expected to reach 2 million tons.

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