Moody's: Government’s extension of provisional anti-dumping duties is credit positive for steelmakers

MUMBAI: Moody's Investors Service said the extension of anti-dumping duties is credit positive for Indian steelmakers as it will continue to protect them against cheaper imports from other Asian countries and reduce exposure to domestic price volatility.

The Government on Feb. 7 extended the validity of provisional anti-dumping duty (ADD) imposed on hot rolled coils ( HRC) and cold rolled coils (CRC) by two months.

"Such provisional anti-dumping duties also represent a progressive move towards more permanent measures," it said in a report. "We expect India to adopt more long-term duties once the Directorate General of Anti-Dumping and Allied Duties completes its investigation into whether countries dumped steel into India."

However, the rating agency, added that the global steel industry continues to be competitive and beset with overcapacity.

India’s crude-steel production growth of 8.8% during April-December 2016 outpaced the 3.4% gain in finished steel consumption.

"We expect modest mid-single-digit growth in steel consumption in the fiscal year ending March 2018, helped by the increase in infrastructure spending as outlined in India’s budget," the reading agency wrote.

Indian steel companies remain exposed to imports from other Asian countries. The continuation of government measures to protect the domestic steel industry is therefore imperative, especially with global and regional overcapacity, it added.