India: Spate of anti-dumping duties to impact HRC exports. What lies ahead?

• EU, Vietnam Turkiye launch dumping probes
  
  
• Shipments to EU top India's HRC exports chart
  
  
• Indian HRC market may remain under pressure
  
  

Morning Brief: In recent worrying developments for India, and what is proving to be a growing protectionist stance across the globe, two economies -- the EU and Vietnam -- have initiated anti-dumping investigations on hot rolled coil (HRC) imports from some key countries, including India, and a third (Turkiye) has already slapped provisional duties.

Dumping occurs when a product is sold in a foreign market at a price lower than its normal value in the exporting country. This practice can harm domestic producers by under-cutting their prices and depressing market share.

EUROFER complaint triggers EC probe: The European Commission (EC) has initiated an anti-dumping investigation relating to imports of certain hot-rolled flat products of iron, non-alloy, or other alloy steel originating in Egypt, India, Japan, and Vietnam. This action follows a complaint lodged by the European Steel Association (EUROFER) on behalf of the Union industry, alleging that these imports are being dumped in the EU market, causing injury to the local industry.

The complaint was submitted on 24 June, 2024, under Article 5 of Regulation (EU) 2016/1036, which provides protection against dumped imports from non-EU countries. The products under investigation include specific flat-rolled products of iron and steel, with exclusions for certain stainless steel products, tool steel, high-speed steel, and others with specific dimensions and characteristics.

The complaint alleges that producers in Egypt, India, Japan, and Vietnam are dumping hot-rolled steel in the EU market. The complaint also alleges that there may be raw material distortions in India and Vietnam, where producers might benefit from government subsidies or other measures that give them an unfair advantage over European producers.

Vietnam turns scanner on China, India: Vietnam, in its turn, has also launched similar investigations. Its Ministry of Industry and Trade (MOIT) has initiated an anti-dumping investigation into HRCs imported from China and India.

The investigation has been launched after a petition was submitted by two prominent Vietnamese mills Formosa Ha Tinh and Hoa Phat. The companies submitted an initial complaint to MOIT on 31 March, providing additional details as requested by authorities on 31 May.

Turkiye's final duties likely in few months: Turkiye too has announced the preliminary results of an anti-dumping investigation into HRCs originating in China, India, Japan and the Russian Federation. The decision was made amid an influx of dumped products, especially from China, into the Turkish market.

Hot-rolled flat products, alloyed and unalloyed, without further processing, were subject to the investigation. The report with conclusions will be sent to the Commission for the Assessment of Unfair Competition in Imports. According to sources, the hearing is scheduled for 16 August, and the final duties will be approved in a few months. The probe covers the period from 1 January 2020 to 30 June , 2023.

For Chinese producers, the dumping duties will be at 20.5-57.7%, for Indian producers, 11.6-18.3%, for Japanese producers, 39.1%, and for Russian producers, 16.1-23.6%, it is heard.

India's HRC exports share to EU, Vietnam and Turkey

BigMint data shows that India exported a total of 2.94 million tonnes (mnt) of HRCs and plates in 2023, which were actually down 10% y-o-y from 3.26 mnt in 2022. Volumes in 2021 were at a far more robust 6.42 mnt. Obviously, exports have been falling amid high energy prices and interest rates, inflation, surging freights and the resultant slackened global demand.

India's shipments to the EU have led the exports charts in the last three years. In 2023, volumes were at 1.61 mnt (55%), followed by 0.31 mnt to Vietnam (11%) and a far lower 0.05 mnt to Turkiye (2%).

India's company-wise exports to above 3 countries

All the big five Indian steel mills were active exporters to all three geographies - the EU, Vietnam and Turkiye.

In 2023, JSW Steel led the exports charge to the EU with 0.89 mnt, followed by JSPL (0.26 mnt) and AM/NS India (0.25 mnt).

Tata Steel was the only mill to have exported to Vietnam over 2021-23. Last year, it was the sole exporter with 0.05 mnt, although AM/NS India had also been active in the previous two years and SAIL in 2021.

Tata Steel was also the sole exporter to Turkiye in 2023 as well with 0.05 mnt while others were intermittently so in 2021-22.

Impact of dumping duties on Indian HRCs

The medium-to-long term is likely to see HRC exports from India significantly impacted because of two factors. One is the protectionist environment that exporting geographies are trying to create through non-tariff barriers which will directly limit Indian exports of the same.

Secondly, Indian HRC supplies are slated to increase by around 20 mnt over 2021-2025. Capacity is expected to rise from 51 mnt in 2021 to 70 mnt in 2025 and production, from 41 mnt to 55 mnt in this period.

In fact, it may turn out to be a double whammy for Indian mills if domestic demand does not show a sharp turnaround soon enough amid the production glut and limited exporting scope.

Under such circumstances, Indian HRCs will cease to be cost-effective and remain under pressure in the coming one-two years.