Steel cos on tenterhooks as MIP comes for review on Aug 5

Steel companies are on tenterhooks as the government is set to review impact of minimum import price and decide on its extension beyond August 5, even as small value added steel product manufacturers have called for its withdrawal amid falling exports.

Last February, the protectionist measure for the steel industry was introduced by the government on 173 steel items for six months.

It restricts import of the listed steel items below the price range of $341 a tonne to $752 a tonne.

Big players such as JSW, Tata Steel and state-owned Steel Authority of India want MIP to continue as it has helped them improve margins by reining in steel imports in the last nine months.

Union Steel Minister Chaudhury Birendra Singh had called an urgent meeting of steel companies and industry associations last week to discuss the impact of MIP, safeguard and anti-dumping duties on steel products. Under pressure from various user-industries, the government is already considering an option to remove all the steel items covered under anti-dumping investigation from the purview of MIP, said sources.

TS Bhasin, Chairman, Engineering Export Promotion Council, said steel companies claim that importers have circumvented MIP through letter of credits and advance authorisation does not hold true given that imports have been falling.

Further, he added, advance LCs have a lifespan of 90 days for delivery (especially in China) and hence, even if the LCs were opened on February 4, the delivery should have happened by April.
Moreover, hot rolled coil export price (FOB China) has increased 30 per cent to $350 a tonne in July from $250 a tonne logged in last December.

Steel prices in India are even higher and was not tenable due to slack demand, hence it fell, he said. Steel companies have pointed out that MIP ensures government’s “Make in India” programme, but they fail to understand that the sharp rise in steel prices has denied the opportunity to a host of other steel product manufacturers to Make in India, said Bhasin.

In contrast, Sanak Mishra, Secretary General, Indian Steel Association, said an extension MIP regime will support the steel industry to manage its high debt levels, and in turn, reduce the spectre of NPAs with the banking sector.

Post imposition of MIP, the industry has been able to marginally improve its viability after a long period of subdued prices and eroded profit margins, he said.

Steel industry does not see the MIP as a perpetual protectionist step but a necessary temporary measure which will allow time for a path of recovery of the sector, he added.

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