India plans to step up measures to protect its debt-laden domestic steelmakers by imposing a minimum price on steel imports and studying loan restructures as the mills struggle under a deluge of cheap products from China.
The import curbs are necessary to ensure a “level-playing field” for Indian companies after restrictions imposed in September failed to stop a decline in prices, Minister of Steel Aruna Sundararajan, the nation’s top bureaucrat for the industry, said in an interview in New Delhi.
“We cannot have a situation where after so much investment having gone into our local manufacturing, people are actually having to sell below their cost,” Sundararajan said on Monday.
India will monitor the quality of steel imported from nations such as China, South Korea and Japan, she said. The measures are expected to be in place by March.
Producers, including China and Russia, are aggressively selling steel at low prices, forcing governments from India to the US to impose protectionist measures. Faced with a glut of domestic production, surging imports and prices trading around a six-year low, Indian steelmakers have sought safeguards against increasingly cheaper imports.
The government is also working with banks for “a financial package” for restructuring loans to steelmakers, Sundararajan said, without giving details of the plan.
“The cost of capital is high in India especially at a time when global markets are down. We need to reduce their financial load. They need some reprieve,” she said.
India’s iron and steel industry owes 2.87 trillion rupees (US$43.3 billion) of loans. The big four Indian steelmakers have the equivalent of US$17.8 billion of loans and US$7.7 billion of bonds outstanding, according to data compiled by Bloomberg.
India is seeking minimum import prices for a range of products, including hot and cold rolled coiled sheets, galvanized sheets and rods, Sundararajan said.
Floor prices will be fixed by comparing costs of products in domestic markets and to international benchmarks, she said. Prices of hot rolled steel in India have fallen 26 percent in the past 12 months, according to data from Metal Bulletin.
India announced earlier this month the imposition of anti-dumping duties on cold-rolled flat products of stainless steel for five years, as well as a probe on hot-rolled plates and sheets after Indian steelmakers, including Steel Authority of India Ltd, JSW Steel Ltd and Jindal Steel Ltd, complained.
The duty imposed on hot-rolled coils in September slowed India’s imports for the first time in eight months, government data shows, though imports for the eight months through November rose 34 percent.
The “proposed minimum import price has to cover about 45 to 50 percent of the imports coming in,” Sundararajan said. “We may look at channelizing the imports through a few ports so that we can better monitor the quality. ”
The government is also looking at longer term anti-dumping duties, she said.
“The industry is preparing a case. We need to also see what kind of subsidies are being given in those countries to prove what is the actual cost of production there,” she said.
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