Will Indian Govt Ban Steel imports from Iran?

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Many days after the Indian government raised compliance requirements for high-grade steel imports, domestic steelmakers are rallying for additional curbs on imports of steel from Iran which is being allegedly being sold at predatory pricing.

JPC data on Iran imports

As per JPC reports, in FY 17 Steel import from Iran was 37,640 tonnes and from UAE it was 80,390 tonnes. By the end of FY 18, steel imports from Iran reduced by 8.79% but during the same period, steel imports from UAE increased by 86.03%.

Now, in FY 19 (up to Feb 2019) compared to FY 17 steel imports have been reduced by 46.86 %  while during the same period imports from UAE increased by 26.88% reaching at 102,000 tonnes.

JPC’s Country-Wise Import of Iron & Steel through Major Indian Ports

JPC’s Country-Wise Import of Iron & Steel through Major Indian Ports
JPC’s Country-Wise Import of Iron & Steel through Major Indian Ports

Quantity- in metric tonnes

Year Iran UAE
FY 15 0 185,790
FY 16 20,670 174,280
FY 17 37,640 80,390
FY 18 34,330 149,550
FY 19 (up to Feb 2019) 20,000 102,000

Source- JPC

JPC is the only institution in India, which is officially empowered by the Ministry of Steel / Government of India to collect data on the Indian iron and steel industry, resulting in the creation and maintenance of the only basic, complete and non-partisan databank on this industry.

But the letter of Indian Steel Association (ISA) contending the spike in steel imports, which have the country of origin is usually listed as UAE, were actually manufactured in Iran is showing the different picture. ISA represents country’s top steel makers include JSW Steel, Tata Steel, JSPL, Steel Authority of India and Essar Steel.

ISA Seeking Ban on Iran Imports

In March, ISA has urged the Ministry of Steel, Government of India to take immediate action to ban imports of steel products that originate in Iran claiming nearly five-fold increase in shipments that might be traced back to the Persian Gulf nation. However, when import data circulating in media reports was cross-checked with the data maintained with the Joint Plant Committee (JPC), a completely different scene was found.

According to the media reports, India imported around 58,499 tonnes of steel products of Iranian origin in the first two months of 2019. The material was said to have been transhipped through the United Arab Emirates (UAE).

India’s Steel Import as per media reports covering ISA seeking ban on Iran imports

India’s Steel Import as per media reports covering ISA seeking ban on Iran imports
India’s Steel Import as per media reports covering ISA seeking ban on Iran imports

Quantity- in metric tonnes

Year Iran UAE
2016-17 37,461 47,781
2017-18 34,330 118,238
2018-19 (up to Dec 18) Nil 175,499
2018-19 (up to Feb 19) Nil 233,998
Growth (%) NA 390

Source- Media reports

As per reports, ISA analyzes the figures along the following lines. In FY17, steel imports from UAE 47,781 tonnes and next year in FY18 it increased to 118,238 tonnes. In FY 19 (up to December 2018 only), the UAE supplied 175,499 tonnes of steel products to India, but there were no imports from Iran over the same period. However, after the first two months of 2019, imports of steel products from the UAE totaled 233,998 tonnes. Now, comparing imports data (of UAE origin steel) of FY17 to FY19, it can be seen that the imports have increased by 389.73%. Once again, it added, there were no steel imports from Iran over the same period.

According to ISA, Imports have increased after the imposition of US sanctions on Tehran, the ISA said a few weeks ago, adding that the trend may have serious implications under CAATSA (Countering America’s Adversaries Through Sanctions Act).

Furthermore, surging imports from Iran via the UAE at ‘predatory’ prices have added to the worries of Indian steel companies, the ISA said in a letter to Steel Secretary Binoy Kumar.

“Steel imports, whether directly from Iran or via transhipment (through) the UAE, should be banned since this trade is in grave violation of US sanctions, which can attract retaliatory measures by the US against India,” ISA Secretary General Bhaskar Chatterjee said in the letter.

Over the past eight years, Iran has steadily raised output while demand locally has shrunk for the tenth largest global producer of the infrastructure alloy. Surplus capacity has climbed to 12.2 mt, or 36%, even as per capita consumption has gone down by 14%. Iran exports 30% of its steel to ASEAN, posing a threat of diversion to India.

While imports from Iran into India went up 66% in 2017-18, in 2018-19 there had been nil imports until December 2018. However, imports were reportedly routed via the UAE with change in country-origin. “It is alarming to note that exports from the UAE, a net importing country, have suddenly surged 390%, including around 65,000 tonnes of flat steel products, for which the UAE is conventionally a net importer. This establishes the linkage of transhipment of Iran origin steel via the UAE,” the steel association said.

Iran’s top three steel companies, which have a 64% share of production, belong to state-owned Iranian Mining and Mining Industries Development and Renovation Organisation on which US sanctions apply, ISA said.

Iran mills export routes through India

Prior to this, In January 2019, it was reported that Iranian Steel mills Routing Billets Exports through India amid sanctions from United States (US). As per the report, a steel billet export vessel arrived at Indian port on 2nd Dec 2018, from Iran, which is likely to be re-routed to Thailand. This consignment was not to be consumed by Indian re-rollers rather it was send to Kohsichang port, Thailand, which is eventually the largest buyer of Iranian billets. This pointed out that Iranian exporters is routing steel billets exports through India. Now increasing steel imports from UAE to India at predatory pricing could be the reason of worries of Indian companies.

The future of steel imported from Iran and UAE now completely depends on the decision government which is awaited at the moment. However, until then Indian companies will remain in the state of anxiety.