Indian steel export strategy getting increasingly diversified – Mr Sushim Banerjee
Mr Sushim Banerjee DG of INSDAG in his personal capacity wrote in FE that traditionally, Indian steel producers undertake exports as and when either it is difficult to market more volume in the domestic market or the external market offers relatively higher realisation. In the first case, it is known as exportable surplus and there is no conscious effort to create a permanent destination to be explored and nurtured for future shipments and due to the inevitable nature of the exports having been undertaken to clear the inventories, the efforts to negotiate a better deal are also absent. In the second case, which is a rarity as high global prices always result in higher domestic prices, a need is felt to look for a stable destination that would offer long time prospects with a scope for negotiating a better deal which contributes to export of value added steel, establish a competitive supply chain and ensuring business with large institutional buyers and reputed agents.
The multilateral trading pattern as the above simplistic version of the market mechanism indicates, has undergone significant changes giving way to bilateral treaties, free trade agreements and pacts amongst a block of countries.
WTO (formerly GATT) that was formed in 1990s with a laudable objective of promoting free and fair trade and framed guidelines and policies to arrest predatory pricing via anti dumping and countervailing duties, the subsidies offered by various countries to the indigenous industries, safeguarding the interest of countries affected by sudden surge in imports and declaring policies against tariff and non-tariff barriers, played its role quite effectively during the last two decades.
For the last 6 years, the role of WTO had visibly weakened with the signing of more than 350 bilateral agreements and a plethora of AD/CVD cases. Since 2017, the world steel trade had a paradigm shift with President Donald Trump’s emergence as the protector of the US’ economic interests and the country continued to come out with all bilateral or regional treaties (Trans Pacific Partnership, NAFTA renamed as USMCA, among others). The Dispute Settlement Body of WTO has literally lost its relevance, although India has approached it for finding a solution to the unilateral announcement of duty hike on steel and aluminium by the US. Already, Argentina, Australia, Brazil and South Korea have entered into quota arrangement with the US to get an access to around 25-28 million tonne of annual imports. China has retaliated with enhanced duties on imports from the US which is in all probability going ahead with duty hike at the end of 90 days’ deadline.
India has expressed its willingness to negotiate with the US before retaliating against duty hike. While the US market has created a stiff barrier to imports from other countries, EU has identified major exporting nations like China, Brazil, Turkey, Vietnam, Ukraine, India, Indonesia, Mexico, Thailand to serve safeguard duties on selected product categories.
The above facts establish that global trade is currently replete with significant route barriers and steel exports now require a more detailed planning on the impact of concluding the export deal on the viability of the importing country’s domestic industries. As the global market size is getting squeezed, the export penetration is becoming all the more strenuous.
Source : Financial Express