The twin impact of anti-dumping duty and minimum import price is likely to help steel players overcome market challenges led by domestic weak demand. While imposition of provisional anti-dumping duty (ADD) on hot-rolled and cold-rolled coils for six months will help domestic flat steel producers overcome challenges in the market caused by weak domestic demand, extension of minimum import price (MIP) on a truncated list of steel products for two months will benefit the industry, ratings agency ICRABSE 1.39 % has said in its latest sector report.

The latter will particularly benefit producers of long steel products which do not attract ADD as of now.

"India's steel imports, which fell by around 29% year-on-year (YoY) in April-June quarter of the current fiscal largely due to MIP and Safeguard Duty (SGD), are expected to reduce further in the coming months, thus helping domestic mills regain lost market share," Jayanta Roy, senior vice-president, ICRA said.

Domestic hot-rolled coil (HRC) prices witnessed a drop in July 2016 on account of weak demand and subdued Chinese export prices. However, after the imposition of ADD in August 2016, HRC prices have increased by Rs. 1,500/tonne and are expected to remain buoyant in the near term as domestic HRC prices are still cheaper than landed cost of Chinese import offers by about 13%.

However, steel prices are unlikely to increase significantly from the current levels unless demand growth strengthens, ICRA said given a marginal demand growth of 0.4% in Q1 FY2017 and concern linked to overcapacity in the domestic market. Given the scenario, an expected revival in rural demand following a normal monsoon after two years, and a likely rise in discretionary consumption after the 7th Pay Commission payouts, remain critical for an improvement in domestic steel consumption in the second half of FY2017, the report added.

Sources:economictimes.indiatimes.com