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Rabindra Nath Sinha

KOLKATA, Aug. 30

THE rejection by the US International Trade Commission of the US steel industry's demand for imposition of new anti-dumping duties (ADD) ranging from 24 per cent to 153.6 per cent on cold-rolled (CR) steel imports is a setback for not only the US producers but also the US Commerce Department and the American steel workers' unions which had pushed for new imposts.

For the US producers, this setback comes on the back of their resentment over the administration's recent decision to exempt a good number of steel items from the purview of the 8-30 safeguard duty introduced in March last. (It is, perhaps, another matter that the European Union and some other important exporters have found the decision falling much below their expectations and they, therefore, are still firm on retaliatory steps against exports by the US to their markets.)

The most logical interpretation of the rejection by the US International Trade Commission of the producers' demand for new ADD on CR products should be that all the five countries (Australia, Sweden, Japan, Thailand and India), whose exports of CR steel (mostly in coil form) was made a contentious issue, would stand to benefit.

But, in the given circumstances, this interpretation is not valid in the case of India for several reasons, the first and foremost of which is that India is not a major exporter of CR steel.

With a significant domestic consumption base and a significant quantity going into the manufacture of downstream items, mainly GP / GC sheets, India's exports are just over five per cent of the total CR steel output. For example, in 2001-02, against the total CR steel output of 3.6 million tonnes (mt), India exported only 2,17,000 tonnes. In the April-June quarter of this financial year, only 65,000 tonnes were exported out of the production of a little over 1.12 mt.

It also bears mention that India also imports certain categories of CR steel. In the last financial year, 2,30,000 tonnes were imported. In the April-June 2002 quarter, 54,000 tonnes were imported.

Thus, with exports not adding up to a huge quantity, the US cannot account for any significant quantity that will qualify to be reckoned as being injurious to the US steel industry. Tentative estimates suggest that sales to the US may at best account for 25-30 per cent of the total CR steel exports.

And, there is a strong reason for this. The US market needs CR steel of a width 800 mm upward and the strong points have to be very good surface finish and high tolerance level. In India, a significant quantum of CR steel has width of 600 mm and below, which also does not meet the grade requirement in the US. Moreover, the Indian CR steel makers consider the markets in Bangladesh, China, Hong Kong, Myanmar, Sri Lanka and the UAE more important for them as taken together they account for 40 per cent of the global CR output.

Why then the US producers are targeting India? The most logical explanation appears to be that they see a threat in the production facilities of certain producers, notably Tata Steel and Ispat. Equipped with sophisticated, relatively new CR steel production facilities, they are not only well placed to meet the US-grade requirements but they also have ambitious export plans for the long term.

In these circumstances, it is, perhaps, proper to suggest that the US producers, backed as they are by the Department of Commerce and steel workers' unions, wanted pre-emptive action by the US International Trade Commission.

In India, 11 companies are engaged in exporting CR steel. Tata Steel fought the case before the US International Trade Commission and joining them in the fight was Tube Products of India, which has a relatively small CR steel facility. Tata Steel had engaged a US law firm.

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