KARACHI
As a result of the two-years long anti-dumping investigation by Pakistan’s National Tariff Commission (NTC) a 24.04pc duty has been imposed on the Continuous Casting Billets imported from China for a period of five years, effective from June 22, 2017.
“CC Billets refer to semi-finished products of iron and non-alloy and alloy steel that are used by re-rolling mills in the production of steel bars, wire rods, beams, channels and other related finished steel products,” explained a report by Taurus Securities Limited.
In August 2015, after a complaint was lodged by Amreli Steels Limited, Agha Steel Limited and AGS Metals Limited NTC initiated an anti-dumping investigation concerning heavy dumping of CC Billets from China which in return affected the sales of local players.
After the long investigation period, the commission established that the domestic industry producing CC Billets suffered losses on account of increase in dumped imports, price undercutting, decline in market share and sales etc.
The Chinese players on the other end benefited from the vast dumping on the back of their Government’s rebate and tax incentives on export.
However as of today, the big players in local industry are producing their own Billets and this decision will provide them an edge against the small players who majorly rely on imported raw material.
As explained by the industry sources, the smaller players – with lack of billet production facility – will have an additional 24.04pc of import duty which in return will increase their prices; however, the big players who are able to produce their own raw material will be able to maintain their prices in the market thus grabbing a larger share.
According to Adnan Sami Sheikh, analyst at Topline Securities Limited, “The small players will have only three options, they shut down their operations, they opt for integrated plants and produce their own billets or they adapt themselves with squeezed profit margins.”
Players like Amreli Steels Limited will also get benefit on the sales of Billets which they produce in-house. According to Taurus Securities Limited report, “ASTL supplies billets on special orders and [this decision] would allow ASTL to charge slightly higher prices.”
The report further added, “Whereas Mughal – which procures billets locally – due to its inability to melt the required amount of billets on the back of power issues, an Anti-Dumping duty could mean local billet melters increasing their prices as a response to reduced Chinese competition thus leading to higher cost of purchases for Mughal.”
Although according to Sheikh the anti-dumping duty will not have a direct impact on the finished product as of today, in the longer run the decision will prove to be beneficial for the overall industry.
“This is a positive decision for the industry as in the longer run it will promote integration and whoever is looking to setup a steel plant in future will ensure to build a fully functional plant with capacity to produce raw material (CC Billets) along with finished products.”
