Monday, October 05, 2015

SAIL, Essar hike prices of flat steel prodcuts, take advantage of safeguard duty 
Photo: SAIL
KOLKATA,2 Oct, 2015: Major steel producers have announced a price hike on flat steel products, taking advantage of the 20% safeguard duty imposed last week on hot rolled (HR) coils. The country's largest state-run steel producer Steel Authority of India (SAIL) has raised prices of flat steel products like HR coils by Rs 700 per tonne. Essar Steel too on Thursday decided to raise prices by Rs 500 per tonne on its range of flat products with immediate effect. 

Similar moves are expected to be made by other private sector players too within the next few days, causing a furore among a section of the steel users. They have protested against the hike and raised the demand for a 20% anti-dumping duty on finished steel to create a level playing field. "Our margins are under pressure. Imports continue to affect us. The market remains tough," an official in a leading steel company said to justify the hike. An industry source said the price change is more in the nature of a correction after the prices dropped by almost Rs 10,000 over the past year. 

Analysts were surprised by the timing of hike since the steel market remains lacklustre and the price increase came close on heels of the safeguard duty. 

"The key factor that can sustain any price increase is a revival in steel demand. However, in this case, the main user industries for HR coils -auto and consumer goods -remain slow. Hence, main producers are perhaps testing the waters by announcing a price hike," Goutam Chakraborty, metals analyst at Emkay Global said. 

An official with a top private sector steel producer said they were likely to announce a decision on prices on Monday (October 5) ahead of "a long weekend before us." 

Reacting to the price hike a sizeable section of steel users have called for imposition of a 20% anti-dumping duty on finished stee products to counter the 20% provisional safe guard duty on hot rolled coils a key raw mate rial for value added steel products like seam less tubes & pipes, engineering and fabrication as well as the auto sector. The safeguard duty has prompted steel pro ducers to hike prices making the input mate rial expensive and manufacturing costlier for a large number of end users. This, accord ing to them, will adversely affect the govern ment's 'Make in India' campaign since stee is a major input for the manufacturing sector as a whole. 

"The government should immediately im pose 20% duty on finished manufactured products of steel coming into India to pro vide a level playing field. Imposition of safeguard duty of 20% on hot rolled (HR) coils has made our raw material expansive and domestic manufacturing costlier. How can we compete with imports?" 

H L Bhardwaj, secretary general of Federation of Industries of India (FII), a grouping of domestic manufacturers of seamless tubes and pipes said. He added the domestic seamless pipes industry, which employs over 25,000 people, is staring at imminent closure due to dumping of cheaper products from China. 

"The industry is reeling under low capacity utilisation of 20-30% for the past year and may be forced to shut down factories leading to job losses and closure of ancillary industries,

H L Bhardwaj, secretary general of Federation of Industries of India (FII), a grouping of domestic manufacturers of seamless tubes and pipes said. He added the domestic seamless pipes industry, which employs over 25,000 people, is staring at imminent closure due to dumping of cheaper products from China. 

"The industry is reeling under low capacity utilisation of 20-30% for the past year and may be forced to shut down factories leading to job losses and closure of ancillary industries,"

Bhardwaj said. With a base of 4.5 million tonne, pipes and tubes form a sizeable and critical chunk of steel users, along with other aggrieved user segments like general engineering, fabrication and auto sector. 

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