The Indian steel industry is once again in the doldrums with the United Sates having imposed a dumping duty of upto 72.5% on Indian exports (to the US) of steel plates. The public sector Steel Authority of India (SAIL) is likely to be the worst hit by these measures.
SAIL is the world's 10th largest and India's largest steel manufacturer. It operates 4 integrated steel plants and 2 speciality steel plants. The company has been on the brink of bankruptcy for some time now. It is attempting to raise resources by getting rid of its loss making units.
The United States has imposed duty on five countries excluding India.
SAIL, which is a leading exporter of steel plates, has drawn the attention of the International Trade Commission (ITC), which is likely to give its verdict only by the end of January 2000.
In the meantime, the imposition of duties is likely to adversely affect the recovery prospects of the public sector giant. Indian steel companies have off late been resorting to exports to improve realisations. This is mainly due to the sluggishness in domestic steel markets, even though volumes have staged a smart recovery.
The imposition of duties comes at a time when the floor rates on import of various steel items into India are likely to be removed. The Indian steel companies would then be faced with the prospects of declining exports even as the competition in the domestic markets heat up. How the government will react to this situation as yet remains to be seen.
Lower prices of steel will however benefit the manufacturers of cold rolled products as well as the end users - consumer durable and automobile manufacturers.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407