Jindal Stainless Seeks Government Intervention As Steel Imports Surge
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00:00 Hello and welcome to BQ Promo.
00:02 Very good afternoon to all the viewers.
00:04 I am Heeral Dadia.
00:06 One segment that is in focus is the steel industry and this is because of the kind of
00:12 dumping and the imports that are increasing in the country.
00:16 In fact, Jimbil Stainless has seeked government intervention to check the steel dumping in
00:21 India.
00:22 India's steel imports rose by almost 7.6% to 4.84 lakh metric tons and this is in the
00:29 month of June 2023 on a year-on-year basis.
00:33 Let's understand as to how this would actually impact the industry and what the government
00:37 would do to curb this.
00:40 Joining us on the show is Mr. Rajamani Krishnamurthy, President of Indian Stainless Steel Development
00:44 Association, ISSDA.
00:47 Good afternoon and welcome to the show, Mr. Krishnamurthy.
00:51 Good afternoon.
00:52 Mr. Krishnamurthy, my first question coming to you is how big a phenomena is this right
00:57 now with regards to the dumping of stainless steel that is happening in the country.
01:03 What is the import number actually indicating?
01:07 See, what happens is, I'll just take you when the CVD was first imposed because in 2017
01:15 when there was a huge import coming from China there, so there was a due diligence followed
01:23 by DGTR on a proper study and methodology and they recommend duty on many series, not
01:30 only one particular series and this particular duty was, CVD was on for five years and this
01:37 was imposed in 2017.
01:40 And what happened is in 2021, January, the Ministry of Finance suspended this CVD duty
01:51 without completing the five years tenure, which was earlier given by the DGTR.
01:58 And again, in September, 30th September 2021, they further extended the suspension till
02:05 31st January 2022.
02:08 And on 1st February 2022 in the union budget, they revoked the CVD, which was there in China.
02:17 So if I take you, when the duty was on, the import from China was nearly 83,000, 84,000
02:25 tons annually.
02:28 And once the duty got removed in 2021, it touched 1,57,000 and then in 2021-22, it touched
02:37 3,44,000.
02:38 And in April to December 2022, figure says 5.26 lakhs, that is 5,26,708 tons.
02:49 So this is a phenomenal growth of 528%.
02:54 And this has predominantly come on the 200 series, which is the utensils and kitchenware
03:01 segment.
03:02 And sale is one of the major losers for this.
03:06 They have also submitted to revenue secretary and other Ministry of Steel also saying that
03:12 they lost almost 78% of their market share due to this.
03:17 Now one thing is, there is a myth about stainless steel industry.
03:22 People see that it is only JSL who is the bigger player.
03:25 No, it is not so.
03:27 Because MSME contributes almost 40% of the market share.
03:32 It is at par with JSL.
03:36 If you compare compound MSME production, it is at par with JSL almost.
03:42 So they are the worst affected on this.
03:44 So in India, there are almost 600 MSMEs put together, both induction and re-rollers.
03:52 They are spread across in Rajasthan, Gujarat, then Haryana and Delhi NCR, Vazirpur.
04:00 And many of them have almost 25% of this number has shut down now.
04:05 They are not operative.
04:06 And whoever is operating, they are operating at less than 40% capacity installed.
04:12 So this is a major gold for them.
04:16 And their profitability has come down drastically.
04:19 And all of them are bleeding.
04:20 And we have already, and these MSME put together, they provide an employment of almost 4 to
04:25 5 lakh people.
04:26 And it's a labor intensive segment.
04:29 And due to this 25% shutdown, almost 57,000 to 70,000 people lost their job in the meantime.
04:41 And DGTR has recommended saying that there is the injury on the 200 series for which
04:46 they made a CBD recommendation of 20% from the Ministry of Finance, which has not been
04:52 done yet.
04:54 And we don't know what was the reason for not doing it.
04:57 But all the data is showing, saying that it deserves a duty to be imposed.
05:03 Right.
05:04 So Mr. Krishnamurthy, this gives us a lot of color in terms of what's happening.
05:09 You did mention that it's majority the MSMEs that are hit.
05:13 From the larger players, you do have a SAIL as well as a general stainless which gets
05:17 hit.
05:18 But any other steel giants who get affected with this?
05:21 No, see, there are the entire stainless steel fraternities hit because of the 200 series.
05:29 But if you say per se, you know, JSL, to say their production is not that much because
05:35 they are into a premium segment, they have diverted their product profile into a much
05:40 larger and premium segment, which they are, if you see their balance sheet, it is very
05:45 healthy as compared to SAIL and MSMEs.
05:48 Because MSMEs, they don't have any other product profile diversion because they only know how
05:54 to make 200 series and they know how to make the utensils and kitchenware.
05:58 So they don't have that kind of a technology or innovation that JSL has done in the stainless
06:04 steel industry.
06:05 So SAIL has done it.
06:07 But however, SAIL is not profitable in the other segments because their bread and butter
06:15 is 200 series.
06:16 And they have shifted their production to other segments where they are doing it, but
06:22 they are not profitable.
06:23 Right.
06:24 So what's the differential between the imports versus the local production from a pricing
06:29 perspective?
06:30 See, they are, if I take you, see what we are asking is we are not asking for production.
06:37 There is a misunderstanding from the IMEI.
06:40 This is my view because there is a myth saying that we have been asking for production, which
06:46 is not a production.
06:47 We are asking for a level playing field.
06:50 Because if you have to compare a particular thing, it has to be apple to apple.
06:55 You cannot compare apple and orange.
06:57 That is what our submission is.
07:01 So what we are saying is for stainless steel, it is always compared with carbon steel.
07:06 Unfortunately, we take the brunt also because we had when the export duty was imposed on
07:11 carbon steel, we also came into that brunt.
07:14 And can you imagine a product which was predominantly designed for an export market, 85% of that
07:20 production goes to export markets that attracted an export duty, unfortunately.
07:25 And it got removed after six or seven months.
07:28 Unlike carbon steel manufacturers, the stainless steel manufacturers are very small in nature.
07:36 They cannot withstand that kind of a loss in their balance sheet because predominantly
07:40 their MSMEs are very small players, unlike but for JSL.
07:45 Right.
07:46 So my question is currently, what is the reason for someone to use imported steel versus domestic
07:54 steel?
07:55 I'm sure that is the major reason would be a price point, right?
07:58 There is a clear margin of 30%, which has been a predatory pricing, which is China offering
08:03 to them.
08:04 Because the same product, if you buy it locally in China, it is much costlier to the local
08:08 people than what they are exporting it to India.
08:13 So it is the strategy of China right from the beginning saying that I will do a predatory
08:18 pricing and I'll kill that particular country's market so that I don't have the access for
08:24 the domestic players.
08:25 This is what has been, you know, this is not new to anybody.
08:29 This has been the regular practice of China.
08:31 Unfortunately, we are not taking cognizance of that.
08:34 That is the most unfortunate thing.
08:36 Right.
08:37 So is there a reason where the demand in China right now is suppressed due to which they
08:42 do have, you know, surplus production, which they are dumping into countries like India
08:47 at a lower price?
08:48 Yes, yes, that is absolutely evident because the entire globe is down with recession and
08:55 China is no different.
08:57 The only country which is doing very well is India because of the market.
09:02 India is a sitting duck for everybody and we don't have protection for, you know, remedies
09:06 for our own industry.
09:07 So tell me one thing.
09:09 If there is a possible revival in the Chinese demand, and that's what they are pointing
09:14 out towards with, you know, the macro numbers they're coming up with, is there a possibility
09:20 that the steel prices then could increase and that could actually reduce the price differential
09:26 then in turn increasing the demand for domestic production?
09:30 No, I doubt because unlike India, China has got a large amount of subsidies that is extended
09:39 to the manufacturers and China, whether there is a demand in China or whether there is no
09:44 demand irrespective of that, China's practice is a predatory pricing and killing a particular
09:49 economy.
09:50 And this has been the past history of China and this is very much there in the DNA of
09:54 China.
09:55 So we cannot change that.
09:57 So any demand increase in China is not going to give a much better breathing for our domestic
10:05 players.
10:06 So if I were to give you a particular example for the subsidies, the way they give it to
10:11 the manufacturers, then, for example, all the basic raw materials like scrap, you know,
10:19 they are imported from outside market and China has got abundance of these raw materials.
10:24 Now, for example, if we take scrap, if we have to import it from China, there is a 40
10:30 percent export duty.
10:31 For example, in other words, what the Chinese manufacturers get at 100 rupees, if I have
10:37 to procure it from China, I have to pay 140.
10:40 So I am already 40 percent up on my competition for no rhyme or reason.
10:47 So and if you say, yeah, I get your point.
10:50 My other question to you on this is, you know, if an anti-dumping duty is imposed, which
10:57 are the companies, according to you, in the domestic market who could actually come ahead
11:02 and oppose it?
11:04 See, only the importers, you know, the downstream industry, you know, majority of all these
11:10 downstream industries who have been, who have made a big in the utensils market and kitchenware
11:16 segment, they have grown with the domestic industry consumption only.
11:20 And they have been they have become a brand after taking product from raw material from
11:25 the domestic industry.
11:26 Now, what they see is there is a 30 percent this thing is available.
11:31 So I don't blame them because as a businessman, they will do whatever is profitable to them.
11:37 So the downstream industries, majority of them have opened a trading house and they
11:43 import and they supply to their own downstream industry and they pocket this surplus, which
11:51 they earn out of this import.
11:53 This is not going to the end customer.
11:55 End customer has been paying the price which has been prevalent in the Indian market.
12:01 So if you ask me that, you know, the end customer, are they benefited out of this cheap imports?
12:07 No, a big no, because end customers end up paying the same market price.
12:12 So this who is benefited out of this is the importers and the traders who are benefited
12:17 out.
12:18 So overall, currently, what's the recommendation?
12:21 How much duty is the recommendation?
12:24 Because we've seen anti dumping duty that has come in in the past as well, I think in
12:28 2022, as well as 2018.
12:31 Did firstly, did that make a difference?
12:34 And number two, how much is the recommendation right now?
12:37 See, there was a request for putting CBD or anti dumping on many series, multiple series
12:44 of stainless steel grades.
12:47 But the evidence, injury evidence was not quite witnessed at that particular time by
12:55 the DGTR.
12:56 So they witnessed only saying that 200 series is worst affected, which has an injury.
13:01 So only they have recommended only for the 200 series, which is predominantly the MSME
13:06 segment.
13:07 And they have recommended around 20 19.98% around 20% duty from the report, which was
13:16 published on 6th, April 2023.
13:20 But unfortunately, that has not been implemented so far.
13:23 And we also don't know what was the reason for not implementing it, because it's a prerogative
13:27 of Ministry of Finance.
13:30 But one thing is the data which is available from the commerce side, which shows a huge
13:38 increase on the import side.
13:40 If you cannot believe 33% of the domestic demand is scattered through Chinese imports
13:45 alone.
13:46 Right, I think and this is something which needs to be looked at as well.
13:51 Thank you, Mr. Krishnamurthy, so much for joining us on the show and giving us these
13:54 views.
13:55 So clearly, the imports have risen by almost 7.6% in the month of June on a year on your
13:59 basis.
14:00 Mainly it's China which has been dumping but apart from that, Japan, Vietnam, Saudi Arabia,
14:05 Russia, Nepal, as well as USA, a few of the other countries as well from where we are
14:10 seeing stainless steel that is getting dumped into the country.
14:13 In fact, China, the total imports have surged to 37% as a contribution versus a 26% on a
14:20 year on your basis.
14:22 That's all that we have for this session.
14:23 Thanks for watching and lots more lined up on the other side.
14:25 Please stay tuned to B2Prime.
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