'Extension of anti-dumping duty credit positive for steel companies'

New Delhi: Moody's Investors Service on Friday said extension of anti-dumping duties on hot-rolled and cold-rolled flat products of alloy or non-alloy steel is credit positive for Indian steelmakers as it will continue to protect them from cheaper imports from other Asian nations.

The government had a few days back announced that provisional anti-dumping duties on hot-rolled and cold-rolled flat products of alloy or non-alloy steel will be extended by another two months until April.

"The extension of anti-dumping duties is credit positive for Indian steelmakers as it will continue to protect them against cheaper imports from other Asian countries and reduce exposure to domestic price volatility," the global ratings agency said.

Such provisional anti-dumping duties also represent a progressive move towards more permanent measures.

The initial anti-dumping duties were put in place on August 17, 2016 for a period of six months. The latest announcement followed the government's decision on February 6 to end minimum import prices (MIP).

Of the 173 grades of steel covered under the initial implementation of MIP in February last year, the government has imposed provisional anti-dumping duties on some 124 grades of steel.

"We expect India to adopt more long-term duties once DGAD (Directorate General of Anti-dumping & Allied Duties) completes its investigation into whether countries dumped steel into India and there was injury to the domestic steel industry," it said.

Average monthly steel imports into India fell nearly 37 per cent to around 0.67 million tonnes (MT) during April-December 2016 from over 1 MT in the year ended March 2016 (fiscal 2016), reflecting in part the success of protectionist measures at curbing imports, and a much better operating environment with a recovery in global and regional steel prices," it said.

"In particular, steel prices in India have recovered gradually from the lows observed in fiscal 2016," it said.

However, the global steel industry continues to be competitive and beset with overcapacity.

India's crude steel production growth of 8.8 per cent during April-December 2016 outpaced the 3.4 per cent gain in finished steel consumption.

"We expect modest mid-single-digit growth in steel consumption in the fiscal year ending March 2018, helped by the increase in infrastructure spending as outlined in India's Budget," it said.

Indian steel companies remain exposed to imports from other Asian countries. The continuation of government measures to protect the domestic steel industry is therefore, imperative, especially with global and regional overcapacity.