India: Stainless steel imports surge 177% in Apr-Jul'21

The first four months of this financial year of FY'22 (Apr-Jul), witnessed a staggering 177% rise in stainless steel imports into the country as compared to last year's (FY'21) average, and a 159% increase from FY'17 average, the base year prior to imposition of the countervailing duty (CVD) on China, a steel ministry note reveals. The surge has been powered by non-WTO-compliant subsidies of 20-30 % provided by China and Indonesia to their stainless steel manufacturers, which has been proved by the Directorate General of Trade Remedies in India as well as their global counterparts, the note further says.

The subsidies have created an imbalance in the Indian and international markets, and reduced the competitiveness of Indian products in the domestic industry, causing material injury and persistent financial stress for home-grown businesses. It has also forced the domestic industry to seek redressal from the concerned authorities of the government for the revocation of suspension of CVD on China and imposition of fresh CVD on Indonesia, the note says.

"Suspension of anti-subsidy duty with respect to China and interim anti-subsidy with respect to Indonesia, announced in Budget FY'22, has had an adverse impact on Indian stainless-steel industry. This opening up of the market for stainless-steel-flat-products imports at dumped/subsidised prices from China, and Chinese investments in Indonesia provided rich opportunities to Chinese/Chinese-backed exporters. Investigation recommended continuing with the duty protection. However, a sudden change was effected through the budget, and the adverse impact of these decisions has become apparent from the sudden surge in imports. As a result, Indian companies, particularly the MSMEs, have been languishing," Dr. Aruna Sharma, former secretary, Ministry of Steel, said.

"China is talking about removal of subsidy, but nothing has materialised so far. Once done, the China price will be non-competitive. However, China has invested in Indonesia to displace India from its No.2 position in stainless steel. With the removal of countervailing duties, Indonesia will grow at the expense of India." Sharma added.

The massive surge was seen after the suspension of the anti-subsidy duty on China till 30 September, and the removal of anti-subsidy duty on Indonesia in the Union Budget 2021-22. Imports also saw a rise of 159% from the 2016-17 average, the base prior to imposition of CVD on China. In fact, China's share in the overall stainless steel import basket in Jul'21 had climbed to 66% and those of Indonesia to 15%, taking the total imports from these two countries to 81%.

It is a huge jump from the latter half of FY'18, (post- CVD), when China's share was just 27% and Indonesia share was only 3%. In volume terms, overall imports have increased from an average of 34,105 tonnes (t) per month in 2020-21 to 77,337 t in Jul'21, a huge jump of 227% reflecting the sudden surge in imports because of the new developments. The increase was the result of a 457% increase in Chinese imports and a 288% increase from Indonesia.

While the jump in Chinese exports is understandable given the fact that it is the largest manufacturer and exporter of stainless-steel flat products in the world with surplus capacity, the sudden rise of Indonesia is alarming. In fact, there were huge capacity additions in Indonesia through Chinese investments in the past two to three years, which has changed the trading dynamics of the stainless steel sector in the world.

Indonesia today has around 55 lakh tonnes of installed capacity-which is higher than India's-and is also 25 times more than their total domestic consumption of just 2 lakh tonnes per annum. India, therefore, provides a fertile dumping ground for Indonesian imports, more particularly because Indonesia is part of India's free trade agreement (FTA) with the Association of South East Asian Nations.

A disaggregated study of imported products also reveals how excessive dumping has taken place in J3 grades of stainless steel in the country, which is mostly used by the micro, small and medium-sized industries in the country for making utensils. Imports of J3, a low-cost 200 series grade of stainless steel with about 1% nickel and 13% chromium from China, has jumped from 4,425 t in Apr'21 to 36,164 t in Jul'21, in just four months.