The anti-dumping duty imposed by China on cold-rolled steel imports from Russia, South Korea, Kazakhstan, Taiwan and Ukraine means glad tidings for Indian steel producers.
China announced an anti-dumping duty on cold-rolled products from the five countries.
Indian steel producers said China was expected to source more material from India as Chinese import volumes were expected to remain the same if not rise this year.
Vinod Garg, marketing director, Ispat Industries, said the Chinese move had positive implications for Indian steel producers. The market for cold-rolled and galvanised steel was booming in China and the United States, with the increasing prices, primarily because of the increase in input prices.
Ispat Industries had booked an order from China recently for galvanised steel at $630 per tonne. The company expects the prices to appreciate further.
Raman Madhok, managing director of Jindal Iron and Steel Company, said the Chinese move will have positive impact on Indian producers. He, however, pointed out that Indian producers also needed to diversified their export baskets.
An Essar spokesperson said Indian steel producers had cut exports following a dictat from the Chinese government as a result exports to China had declined. But China's latest move opens opportunities for steel exporters.
S K Gupta, vice-chairman of Jindal Vijaynagar Steel Ltd, said the anti-dumping duty would help Indian steel producers to increase exports.
The development also indicates that Chinese buyers were no longer upset with Indian sellers. In 2003, China had issued a warning to Indian producers to curb exports as shipments had reached the threshold limit of 3 per cent. Among the items under scrutiny were galvanised products.
However, shares of overseas steel makers such as Taiwan's China Steel dipped on the news of the Chinese move, while domestic steel firms cheered the move. Shares of top Chinese maker Baosteel edged up, despite the wider market falling one per cent by midday.
China implemented the tariffs after it concluded that there was dumping of cold-rolled steel by Russia, South Korea, Ukraine, Kazakhstan and Taiwan.
But South Korea's Posco, the world's fourth-largest steel maker, will be exempted as Chinese authorities concluded it was not selling its cold-rolled products below market prices, industry sources say.
The move follows a 20-month US battle to protect its industries. Washington imposed steel import tariffs in March 2002 to help the troubled US steel industry but reversed course last month in the face of a potential trade war over the issue.
"The ministry has decided that dumping of such products does exist, and has caused substantial damage," the commerce ministry said in a statement.
China had slapped tariffs of up to 55 per cent on cold-rolled steel imports from affected countries, effective immediately, it said. They would last until about September 2008.
Key steel producer South Korea was largely unfazed by China's move as its top company was spared and the measures had been expected since the issue arose in September.
"I don't expect it to cause substantial damage to the Korean cold-rolled steel industry since the largest exporter, POSCO, was exempted from the measure," said Park Chan Ki, deputy director of the capital goods trade team at South Korea's Ministry of Commerce, Industry and Energy. "Other steel makers have been preparing to offset the impact."
The tariffs would have little impact on Taiwan steel makers as most of their exports to China were re-exported and exempt from the tax, industry officials said.
"More than 90 per cent of our cold-rolled steel products sent to China are for re-export, so they are not subject to the anti-dumping duties," said Chen Tze-haw, vice president of China Steel Corp, Taiwan's largest steel maker.
China, which replaced the United States to become the largest steel importer in 2002, imported more than nine million tonnes of cold-rolled steel in 2003, analysts say.
Beneficiaries in the Chinese steel industry include Baoshan Iron and Steel Co Ltd, Angang New Steel Co Ltd and Wuhan Steel.
"Domestic Chinese producers could benefit from higher domestic selling prices, and Japanese steel companies excluded from the new tariff system and POSCO could benefit from higher export prices," Dutch bank ING said in a report after the announcement.
"The decision will have a positive impact on the company's operations and production," Wuhan Steel said in a statement published in the Shanghai Securities News. Cold-rolled steel production and sales made up around 48 per cent of Wuhan Steel's revenues in the first half of 2003.
