In an interview with CNBC-TV18, Kalyani Steel MD RK Goyal talked about the steel industry's demand that the government hike import duty.
He said that the government should introduce some sort of steep import duty so as to deter dumping of products from countries such as China. "We are expecting government should take some initiative and something should happen."
Below is the transcript of RK Goyal's interview with Anuj Singhal and Ekta Batra on CNBC-TV18.
Anuj: Any update on your demand on import duty of steel products or do you believe that something like this could come in the Budget?
A: As of now there is nothing. We are expecting government should take some initiative and something should happen. Just for your information, particularly long products import has gone up by 550 percent in Q3 and in terms of volume it has gone up to the level of 450,000 tonnes in last quarter. On annualised basis it becomes 1.8 million tonne against the total demand of the industry around 4 million tonne and if this continues, I think the local industry will be wiped off.
Ekta: Can you tell us the reason for the surge in imports? Is it because of dumping that is taking place because of currency depreciation in say the ruble or maybe it is from China? Take us through the scenario.
A: Major imports are coming from China besides from various other countries including Europe, including Russia. The reason is that the economic situation or the slowdown in the growth in China -- since local demand in China is going down, they are trying to find out avenues to export that material and India is a good ground for them where there are practically no restrictions and a reasonable size market for them.
Ekta: How much of an import duty hike would you like to see and how much do you think it will protect the industry at this point in time?
A: I think a marginal increase in import duty from 9-10 percent will not affect Chinese because they will reduce the price further. We need to have some other trade barriers by which this entry of this material to the country is restricted.
Ekta: What would these other trade barriers be which you would possibly ask the government to implement and what might even be the progress on it?
A: The first and foremost will be whenever such surge in imports are there from any specific country, it can have safeguard duty, which can be implemented fairly fast and then the duty level will be something in the range of 30-50 percent. If such a thing happens, only then it will reduce the imports from China and in a longer period maybe in six months time anti-dumping duty on Chinese products for at least next five years.
Anuj: What is the situation domestically in terms of the iron ore situation?
A: As far as iron ore is concerned since the demand of steel is going down -- demand for iron ore is also little low but at the same time, prices are stable, quality is further deteriorating particularly in Karnataka and hence the cost to the manufacturer is higher.
Ekta: Wanted to focus on your company in general, what would be the impact or what is the impact of the dumping that is taking place with regards to long products etc right now which is happening specifically for Kalyani Steel?
A: Nothing is effecting on two counts. One is that the total demand in the market for local products is going down. Number two is that there is a very large pressure on prices. So we are also getting affected on both these accounts.
Ekta: What is the impact of this on domestic steel prices?
A: Every customer is asking for price reduction. As of now, we are holding it but I don't know how to respond or we will respond as the situation arises.
Ekta: How much has it seen a reduction by since the imports increased? Can you give us a sense in percentage?
A: As far as the volume part is concerned, the reduction is something between 10 percent and 50 percent from one company to another.
Ekta: The other one point that I wanted to bring up was basically the iron ore procurement, are you possibly going to look to import iron ore, what is the current domestic scenario looking like?
A: As of now, major imports to my understanding is being done by larger players like JSW Steel, Tata Steel and all. Our total requirement is very small so as long as we are getting material from e-auctions in Karnataka, we would like to do that but if there is a further surge in prices locally then we will resort to imports.
Ekta: What would your capacity utilisation be at currently?
A: Currently our capacity utilisation is around 70 percent.
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