Source: Deccan Chronicle
The aggregate steel exports from Japan and Korea to India rose by 0.5 MT in FY2019, hinting at a part-diversion of the 1.6 MT volumes lost in the US. These additional imports partly contributed to an increase in steel imports to 8.8 MT in FY2019 from 8.4 MT in FY2018.
This is notwithstanding the fact that the import restrictions by the US (on March 8, 2018, the US government invoked Section 232 of the Trade Expansion Act of 1962 and had introduced a 25 per cent ad valorem tariff on import of steel from most countries with effect from March 23, 2018) led to a 31 per cent decline in combined steel exports from Korea and Japan to the US (3.5 MT in FY2019 vis-à-vis 5.1 MT in FY2018).
The restrictions seem to have had an impact on their overall steel exports as well, as reflected by a YoY decline of 4 per cent and 8 per cent reported by Korea and Japan.
“The direct impact of the US import tariffs on India was limited as exports to the US accounted for only 5.5 per cent of India’s total steel exports in FY2018. However, a part diversion of steel exports by Korea and Japan, largely impacted by the US import tariffs, kept India’s steel imports elevated in FY2019. With the EU extending import restrictions till July 2021 and given the rising trade protectionism globally, a further diversion of shipments to India cannot be ruled out, unless the Indian government comes out with its own version of additional trade protection measures to shield the domestic steel industry from higher imports,” said a recent report by Icra.
Interestingly, imports from Korea and Japan do not attract any import duty due to their free trade agreements with India, which gives them price advantage over China (which attracts a 13.75 per cent import duty.
For the record, while Indian imports from Korea rose by 16 per cent to 3.0 MT in FY2019, imports from Japan witnessed a 10 per cent growth and stood at 1.3 MT. On the other hand, China reported a 19 per cent decline in exports to the US in FY2019, but India’s steel import from China dropped by 18 per cent to 1.6 MT as domestic prices were lower than the landed cost.