Editorial


FTAs harming local stainless steel sector greatly

Global stainless steel (SS) consumption has been increasing in recent years, mostly due to a sharp surge in demand from the Asia-Pacific area, notably China and India.

Usage of SS in India experienced a significant transition. Because of the increasing rate of its usage, India has been able to preserve its position as the world's second biggest manufacturer of SS.

However, the SS business in India is being heavily impacted by broad exceptional events like the breakout of the Covid-19 epidemic. Unprecedented events, like lockdowns, had a significant influence on the industry.

Additionally, changes in the demand-supply environment generated worldwide market disruptions, which harmed domestic industry. Higher output in ASEAN nations is threatening the indigenous industry's outlook. Increased dumping of unreasonably priced imports poses a challenge to Indian SS manufacturing. Rising imports entering the nation under FTAs cause Indian industries to underutilize their capacity.

Despite the fact that anti-dumping taxes are in place on specific Chinese items, they are now being routed through other FTA nations.

Insiders predict that Indonesia will replace India as the world's second-largest SS manufacturer in CY2021. Global SS sector is undergoing significant transformation. On the one hand, Indonesia has a SS capacity of 5.5 MT. On the other side, Chinese government announced that the export tax credit would be phased out in May 2021, limiting Chinese SS exports. Thus, exports from China may fall, but exports from the same Chinese enterprises in Indonesia may skyrocket. This has major ramifications for India, since it is anticipated that import intensity from Indonesia would roughly treble, as trade corrective measures like countervailing duty have been abolished after the Union Budget announcement.

Chinese firms have been establishing huge capacity in Indonesia, taking use of a variety of advantages like raw material accessibility and local incentives. Given that the capacity of approximately 5.5 MT installed in Indonesia is over 25 times the local demand of only 0.2 MT, it is clear that the production is completely aimed at the export markets.

As a result, trade actions for dumping and non-WTO compliance subsidies have been launched against Indonesian SS manufacturers across the world, including China. With the beleaguered domestic SS industry already operating at 60% capacity and importing countries building irresponsible capacity, industry experts believe the situation for the domestic industry, which is already reeling from the impact of COVID's second wave, could quickly spiral out of control.

 

Government and other regulatory bodies should now investigate the continuing dumping and aggressively evaluate all current FTA provisions to improve and assure a level playing field for local business.