Initiation of safeguard investigation concerning imports of “Hot Rolled flat sheets and plates (excluding hot rolled flat products in coil form) of alloy or non-alloy steel” into India. - F. No. D-22011/47/2015 - Safeguard Duty

MINISTRY OF FINANCE (Directorate General of Safeguards) (Customs and Central Excise) NOTICE OF INITIATION OF SAFEGUARD INVESTIGATION New Delhi, the 7 th December, 2015 Sub: Initiation of safeguard investigation concerning imports of Hot Rolled flat sheets and plates (excluding hot rolled flat products in coil form) of alloy or non-alloy steel into India. G.S.R. 938(E) .- An application has been filed before me on 28th October, 2015 under Rule 5 of the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 by M/S Steel Authority of India Limited, M/S Essar Steel India Limited, M/S JSW Steel Limited and M/S Jindal Steel Power Ltd through M/S Lakshmi Kumaran Sridharan Attorneys, New Delhi, for imposition of Safeguard Duty on imports Hot Rolled flat sheets and plates (excluding hot rolled flat products in coil form) of alloy or non alloy steel having nominal thickness less than or equal to 150mm and nominal width of greater than or equal to 600 mm hereinafter referred to as PUC (Product under consideration) into India to protect the domestic producers of PUC against serious injury/threat of serious injury caused by the increased imports of PUC into India. 2. Domestic Industry: The applicants, i.e., M/S Steel Authority of India Limited, M/S Essar Steel India Limited, M/S JSW Steel Limited and Jindal Steel Power Ltd. claimed that their production together accounts for more than 50% of the total production of PUC in India and it represent a major proportion of Indian production of the product under consideration in the country and thus have the standing to file the present application. 3. Product Involved : The product under consideration in the present investigation is Hot Rolled flat sheets and plates (excluding hot rolled flat products in coil form) of alloy or non-alloy steel having nominal thickness less than or equal to 150mm and nominal width of greater than or equal to 600mm whether or not rolled from universal plate mill including reversible plate mill or hot strip mill or tandem mill or steckel mill or any other similar process with various type of rolling configuration including 2-High, 3-High, 4-High, cluster mill or any similar hot rolling process. The product under consideration is classified under Tariff Heading 7208 and 7225 1 [(72254013, 72254019, 72254020, 72254030 and 72259900)] which are directly substituting the products manufactured by the DI that fall under the tariff heading 7208 ) of the Customs Tariff Act, 1975. These products include sheets and plates produced either directly from the hot rolling process or cut / sheared from hot rolled coils. These products are flat products of iron, alloy or non-alloy steel, in prime or non-prime condition having as-rolled edge or trimmed edge or milled edge or sheared edge or laser-cut edge or gas-cut edge. These products may be pickled or non-pickled (with or without skin-pass or tempering), normalized or un-normalized, ultra-sonically tested or untested or oiled or non-oiled etc. These products may be as-rolled or thermo-mechanically rolled or thermo-mechanically controlled rolled or controlled rolled or normalized rolled or normalized or subject to any other similar process. These products may have patterns in relief/chequered patterns of different types derived directly during hot rolling. These products may be sand blasted or shot blasted or subjected to similar processes. These products may find applications spread across various end-usages including but not limited to structural applications, general engineering fabrication, automotive, earth-moving mining equipment, storage tanks, low pressure heaters, treaters, tanks other low pressure vessels, infrastructure and construction sectors such as port, railway, airport, bridges, fly-overs, power generation, transmission distribution sector, wind-mill, ship building boats, tube pipe manufacturing for transporting semi-solid, liquid gas. By ample clarification, the following are not included in the scope of the product under consideration: a) Hot rolled flat products of stainless steel; b) API grade steel conforming to X-52 and higher API grades for manufacturing pipes used for pipeline transportation systems in the petroleum and natural gas industries; c) Hot rolled plates for manufacturing boilers and pressure vessels confirming to IS 2002 and IS 2041; d) Silicon electrical steel; e) Cladded steel; f) Quenched and tempered steel; 4. Period of Investigation (POI): The applicants have submitted all the data from 2012-13 to 2015-16 (up to Sept.,15). The period for investigation selected is 2012-13 to 2015-16 (A) which is long enough in order to take into consideration the market conditions and to ascertain the need of imposition of Safeguard Duty. 5. Source of information: The transaction-wise import data for the PUC has been taken from DGCI S (Ministry Of Commerce) from 2012-13 to 2015-16 (upto Aug,15) and same has been taken into consideration for analysis. The domestic data from 2012-13 to 2015-16(up to Sept.,15) have been submitted by the domestic industry and the same been taken into consideration for analysis. 6. Increased Imports (absolute in relative terms): PUC is imported into India primarily from Indonesia, China PR, Japan, Korea RP, Russia and Ukraine. The imports of PUC have shown an increasing trend in absolute terms as well as in relative terms during the period as shown in table below:- Year Total Imports (MT) Trend All India Production (MT) import with respect to total production(%) 2012-13 601,667 100 5264627 11 2013-14 323,723 54 5420737 6 2014-15 599891 100 5001044 12 2015-16(A) 708816 118 5048846 147 7. Serious Injury: The applicant have claimed that the increased imports of PUC have caused and are threatening to cause serious injury to the domestic producers of PUC as indicated by the following factors: (a) Production: The production of the domestic industry remained at the same level as shown in the following table:- YEAR Production of DI (MT) Trend 2012-13 4649918 100 2013-14 4237844 91 2014-15 4303683 93 2015-16(A) 4306260 93 (b) Market Share of domestic producers in domestic demand: Market share of the applicants has fallen in the most recent period. Applicants had a market share of 73% in 2014-15 which fell to 70% during 2015-16 (A). During the same period, the market share of import increased from 12% to 13%, as shown below:- Financial Year Total Import (MT) Sales of DI (MT) Captive consumption of DI (MT) Sales of other Indian Producers (MT) Total Demand (MT) Market Share (%) DI Import 2012-13 601,667 3683111 439569 536201 5260548 70 11 2013-14 323,723 3662331 192398 994887 5173339 71 6 2014-15 599891 3768085 157747 639349 5165072 73 12 2015-16(A) 708816 3771342 227971 694669 5402798 70 13 (c) Productivity Employment: Since the applicant companies are multi-product companies, the employment levels have not undergone any significant change and productivity per day is as under:- Financial Year Productivity per day(MT) (Indexed) 2012-13 100 2013-14 91 2014-15 93 2015-16(A) 93 (d) Capacity Utilisation: During the period, the capacity utilisation decreased from 45% to 37% during 2012-13 to 2015-16(A) as evident from the table below: Financial Year Installed Capacity (MT) Capacity Utilisation (%) 2012-13 10336260 45 2013-14 11159000 38 2014-15 11305667 38 2015-16(A) 11589959 37 (e) Profit/loss The profitability of the domestic industry has declined sharply in 2015-16(A) and they have started recording losses as shown in the following table:- Financial Year Profitability (Rs. /MT) (Indexed) ROCE(%) Indexed 2012-13 100 100 2013-14 66 71 2014-15 39 43 2015-16(A) -230 -1 (f) Inventory- The table below depicts the inventory levels which have witnessed a surge from 100 points in 2012-13 to 130 points in 2015-16(A). Financial Year/Quarter Inventory (MT) (Indexed) 2012-13 100 2013-14 104 2014-15 104 2015-16(A) 130 8. The domestic industry has requested for immediate imposition of safeguard measures for a period of four years in their application. The domestic industry has also requested for imposition of provisional safeguard duty in view of steep deterioration in performance of the domestic industry as a result of increased imports of product under consideration. 9. The application has been examined and it has been found that prima facie increased imports of PUC have caused or are threatening to cause serious injury to the domestic producers of PUC and accordingly, it has been decided to initiate an investigation through this notice. 10. All interested parties may make their views known within a period of 30 days from the date of this notice to: The Director General (Safeguards) Bhai Vir Singh Sahitya Sadan: 2nd Floor, Bhai Vir Singh Marg, Gole Market, New Delhi-110 001, INDIA. Telefax: 011-23741542/ 23741537 E-mail: [email protected] 11. All known interested parties are also being addressed separately. 12. Any other party to the investigation who wishes to be considered as an interested party may submit its request so as to reach the Director General (Safeguards) on the aforementioned address within 15 days from the date of this notice. 13. A public file containing all relevant material (non-confidential) shall be available for inspection by all interested parties in the office of the Director General (Safeguards) on the aforementioned address. [F. No. D-22011/47/2015] VINAY CHHABRA, Director General ----------------------------- Notes:- 1. Corrected vide F. No. D-22011/ 47/2015/1448 - Dated 11-12-2015 , before it was read as, (722540413, 72254019, 72254020, 72254030 and72259900)