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Yuan devaluation spurs India to consider more curbs on steel imports

India said it’s being forced to consider steel safeguard duties and more anti-dumping curbs as the yuan’s devaluation threatens to stoke surging Chinese shipments.

A steel import-tax increase earlier this month may not be enough of a deterrence, financial services secretary Hasmukh Adhia said. Adhia has seen the steel industry contribute to elevated bad debt in India, in part as producers struggle to compete with imports from nations such as China and Russia.

“The global lack of demand in steel is so strong that one isn’t sure how, even after this recent increase, it’s going to help,” Adhia said in an interview on Sunday in New Delhi. “We’ll have to think about other options, whether safeguard duty and anti-dumping duty can also be used.”

Import levies were pushed up after talks at the highest levels of government concluded that India must protect domestic producers for the time being, Adhia said. The industry should also spell out the need for more measures, he said. The finance and commerce ministries usually take decisions on curbs.

India raised the import tax on certain steel products to 12.5% from 10% on 12 August. The government imposed some anti-dumping duties in June. Indian mills including Tata Steel Ltd had sought higher taxes to check imports.

Indian steel imports jumped 58% to 3.5 million tonnes in the four months ended on 31 July, according to government data. In the first seven months of 2015, total exports from China expanded 27% to 62.13 million tonnes, the highest ever for the period, according to data compiled by Bloomberg.

China’s 11 August move to allow markets greater sway in setting the yuan’s level led to the biggest selloff in 21 years. That makes the flood of steel and aluminium exports from the world’s biggest producer even cheaper.

“China has so much capacity,” Adhia said.
Source: Bloomberg