Lifting of anti-dumping duty on Graphite Electrode imports from China paves the way for cheaper Chinese electrodes making their way back into the Indian market.
In India (which has emerged as the world’s second largest crude steel producer overtaking Japan), the lion’s share of steel production takes place via the Blast Furnace route whereas the percentage share of electric furnaces in total steel production is limited to 20-22%.
Although India has limited EAF capacities, before 2015 the country’s Graphite Electrode (a key component in manufacturing via the EAF route) requirement used to be met through imports despite the presence of two key Graphite Electrode producers – HEG Ltd. and Graphite India.
According to data maintained by SteelMint, Graphite Electrode imports in FY14 (which stood at 12,800 MT) and in FY15 (13,700 MT), revealed an increase in cheap imports from China that flooded the market.
Subsequently in 2015, the Indian Finance Ministry imposed an anti-dumping duty on Graphite Electrode imports from China for a period of five years. The key objective behind this move was to defend the domestic industry from cheap Graphite Electrode shipments from China coming close in the wake of a petition filed by HEG Ltd. and Graphite India urging the government to protect the interests of domestic producers.
Why Was The Anti-dumping Duty Lifted?
In the latter half of 2017, electrode demand and prices in China climbed steeply amid supply side reforms and promotion of EAFs. As a result, Graphite Electrode manufacturers across the globe, including those in India, took advantage of the situation by raising prices significantly and keeping a significant chunk of the produce aside for exports.
Subsequently, the almost astronomical Graphite Electrode prices and scarce domestic availability of especially the low-grade (RP, HP) electrodes due to the anti-dumping duty resulted in acute shortage of Graphite Electrodes in the Indian market creating a major problem for steel manufactures using ladle furnaces.
In a bid to provide some succor to domestic manufacturers, the Alloy Steel Producers Association of India (ASPA) requested the Directorate General of Anti-Dumping & Allied Duties (DGAD), which functions under the aegis of the Ministry of Commerce, for initiation of a mid-term review of the anti-dumping duty imposed on Graphite Electrode imports from China. Such a review is undertaken only if a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty.
Consequent to its review, in Aug’18 the DGAD announced the removal of the anti-dumping duty stating that given the rise in global Graphite Electrode prices, imports were no longer a threat to the Indian market.
Imports of Chinese Graphite Electrodes Rising Again
Now, after the duty has been lifted, the big question remains whether Chinese Graphite Electrodes have once again started making their way into India. SteelMint has analyzed India’s Graphite Electrode import trends over the past couple of years.
As per data shared by Indian Customs, although the quantity of Graphite Electrode imported is not very high, a surge of 84% Y-o-Y has been recorded since imports have increased from 3,181 tonne during Jan-Nov’17 to 5,838 tonne in Jan-Nov’18.
Out of the total imports of 5,838 tonne during Jan-Nov’18, highest imports have been recorded from China at 3,604 tonne, followed by Malaysia at 1,846 tonne. In contrast, in the corresponding period of 2017, imports from China stood at a meagre 414 tonne and the highest import figure was from Malaysia recorded at 1,456 tonne.
This goes to show that the removal of the anti-dumping duty on Graphite Electrode imports by India has resulted in higher quantity of Chinese Graphite Electrodes entering the country.
Be a Part of ‘International Graphite Electrodes & Needle Coke Roadshow’
According to market sources, although Indian manufacturers are capable of producing high-grade electrodes, steel manufacturers using ladle furnaces in India require low-grade Graphite Electrodes that are not manufactured in India and thus need to import the same from China. Also, chances are high that such imports may record a steady increase in the coming months. Now, will Chinese UHP grade electrodes make their way into India? How much Graphite Electrode capacity is China adding in 2019 and 2020? To know more, make sure you join SteelMint at the ‘International Graphite Electrodes & Needle Coke Roadshow – China’ to be held from 8 to 12 April, 2019.