India’s Directorate General of Trade Remedies (DGTR) has recommended a provisional 12% safeguard duty for 200 days on non-alloy and alloy flat steel products, notes Kallanish.

The authority will now make a final determination, it says in an 18 March statement.

The product under consideration (PUC) comprises five categories: hot rolled coil, sheet and plate; HR plate mill plate; cold rolled coil and sheet; metallic coated steel coil and sheet, whether or not profiled, including galvanneal, coated with zinc or aluminium-zinc or zinc-aluminium-magnesium; and colour coated coil and sheet, whether or not profiled. The PUC tariff headings are 7208, 7209, 7210, 7211, 7212, 7225 and 7226.

Products excluded are cold rolled grain oriented electrical steel (CRGO), cold rolled non-oriented electrical steel (CRNO) coils and sheets, electro galvanized steel, tinplate, stainless steel and others.

DGTR’s preliminary findings show a significant rise in PUC imports into India, causing serious injury to domestic producers. Given the critical circumstances, any delay in applying provisional safeguard measures would cause irreparable damage, the authority notes. Trade diversion due to US protective measures is a key factor in the surge of imports, it adds.

The notification exempts developing countries from the measures, except China and Vietnam. It will also be applicable to developed nations.

DGTR notes the 12% safeguard duty will not be imposed if import prices on a cif basis are at or above these levels:

Source: DGTR, Kallanish

DGTR has invited comments on its preliminary findings within 30 days, following which an oral hearing will be held, and further verification, before passing the final order. India’s finance ministry has the authority to take the final decision to impose duties recommended by DGTR.

Market participants believe that while this will support domestic flat steel prices, it is unlikely to boost them significantly further, as the market has already priced this in over the past few weeks.

An industry veteran says: “No doubt, prices have already inched up. But there may not be any large further movement as buyers may postpone their purchases in that case. The main producers are under tremendous pressure to sell material in the current month. Moreover, [the Ministry of Finance] may take some more time to decide the imposition and may like to wait till the final outcome of the investigation.”

Some sources estimate a price hike of roughly INR 1,000-1,500/tonne ($12-17) across products may be likely in the near term. One source notes: “In coils, there could be a further improvement of maybe INR 1,000/t but most of it is factored in. And, as such, there is too much capacity in coils and very limited export avenues.”

HR plate prices may not see much movement. “There is already a cap on prices – so say S355JR grade plates will land at INR 61,500/t in Mumbai, at $695/t, and we are already at similar levels. So there’s no great scope of increase in plates,” the source adds.

However, another source counters that higher grades of plate may see some imports from FTA countries.

Meanwhile, end-users have expressed a negative sentiment. "Yes, it’s a blow to the end-user segment. But there are many ifs and buts! If the safeguard is on Vietnam as well, we can look into [importing from] other developing nations like Malaysia, Indonesia. However, it’s very early to say and this is just a proposal. Let us wait for the final verdict," says a Mumbai-based end-user.

The safeguard duty pricing methodology remains unclear, with some expecting the duty to apply only to the differential between the actual import price and duty threshold price. Others think it will apply to the full cif import price if below the threshold. Non-FTA suppliers, like China, will face an additional 7.5% basic customs duty under both scenarios. Clarification is being awaited.

Source say, under the price differential scenario, importers can face an estimated additional charge of $18/t for non-FTA imports. But they add it will hardly have a significant impact on cheaper imports. They note this would follow the precedent set by the Minimum Import Price method DGTR imposed in 2016.

However, others counter that since this safeguard measure is a different structure, it is more likely to be applicable to the entire import price if it falls below the DGTR's threshold. In this case, lower-priced imports will be more significantly impacted. A source adds the price differential calculation "seems unlikely … [as] there is no minimum import; there is a maximum import [price] beyond which the safeguard is not applicable."

The market has been keenly awaiting the outcome of the probe since it was launched by DGTR in December.