Critical to control steel dumping: ISSDA

Indian Stainless Steel Development Association (ISSDA), the apex stainless steel body, has voiced concerns about the impending adverse impact on domestic industry due to the temporary revocation of trade remedial duties on importing stainless steel, as announced in this year’s Union Budget.

Four major associations representing the micro, small and medium enterprises (MSME) among stainless steel producers, The Wazirpur Industrial Estate Welfare Society, Delhi; Rajasthan Stainless Steel Re-rollers Association, Jodhpur, Rajasthan; Jagadhri Stainless Steel Re-roller Association, Haryana; and Stainless Steel Re-rollers Association, Ahmedabad, Gujarat, joined ISSDA to urge the government to reconsider this step as it will distort the domestic market by flooding it with subsidised stainless steel from China and Indonesia, and will lead several MSME players to the verge of bankruptcy.

KK Pahuja, President, ISSDA, said, that the government has reversed six trade remedies━of which three relate to stainless steel, which is just 3% of overall steel industry in India, and that this has disproportionately impacted stainless steel, including its MSME sector, considerably dipping the market sentiment.

“It is noteworthy,” Pahuja said, “that the MSME sector constitutes about 35% of the domestic stainless steel industry, spread across the country, and is a major supplier for utensils and household segments. However, the installed capacity for manufacturing stainless steel in the MSME sector is ~15 lakh tonne, with less than 50% being utilised. Keeping this in mind, a potential market brimming with unregulated and cheap imports of Chinese stainless-steel goods is expected to make MSME players go bankrupt or turn them into traders. The demand generated by a growth-oriented budget may be captured by cheap dumped imports by Chinese companies, in and out of China.”

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Why the dumping? While China has over 30% surplus capacity for stainless steel production, huge capacity additions backed by Chinese investments have brought the installed production capacity of Indonesia to 30 lakh tonne in the last 2-3 years, along with an additional 25 lakh tonne capacity in the pipeline. Indonesia’s domestic consumption is a mere 0.2 lakh tonne.

Consequently, the two nations have been dumping subsidised and substandard stainless steel products in India and other global economies in heavy volumes and unregulated manner in the past several years. China and Indonesia are also known to provide non-WTO compliant subsidies to the tune of 20-30% to their domestic manufacturers, rendering the global stainless steel market significantly destabilised. Consequently, all economies have countered this irrational dumping by enforcing additional trade remedial duties.

This trend will further have an adverse impact on prospective investment in the domestic industry, he said, especially when the industry has been under financial stress for more than a decade and will lead to loss of employment. “[The] move is poised to drift away from the Make in India stance of the government, while leaving the domestic industry at the mercy of foreign players instead of being atmanirbhar [self-reliant].”

Established in 1989 by leading stainless steel producers, ISSDA was formed with the explicit objective of diversifying the applications of stainless steel and increasing usage volumes in the country.

Image: The production-consumption imbalance in China and Indonesia are proving particularly difficult for the smaller makers of stainless steel. 

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