India increased the import tax on some steel products for the second time in two months, adding to signs that governments are shoring up tariffs as mills contend with record shipments from China.
The tax on imports of flat-rolled products was raised 2.5 percentage points to 12.5 percent, effective from Wednesday, while the duty on stainless-steel bars, rods, and wires increased to 10 percent, the finance ministry said. The ministry didn’t give a reason, other than to say the change was necessary. India last increased the tariff in mid-June.
Indian mills including Tata Steel Ltd. had sought increased taxes to check imports, with JSW Steel Ltd. Chairman Sajjan Jindal saying last month the global industry is reeling under the impact of Chinese shipments. Chinese producers are ramping up overseas sales as demand slows at home, boosting competition and hurting prices. This week’s surprise yuan devaluation is seen as providing further impetus to the flow.
“The increase of 2.5 percent is very small as expectations were for an increase of 10 percent to 15 percent,” Giriraj Daga, a portfolio manager at SKS Capital & Research Pvt., said from Mumbai. “Last time when the government increased the duty, Chinese prices corrected the next day, negating the increase.”
Steel imports by India jumped 58 percent to 3.5 million tons in the four months ended July 31, according to government data. In the first seven months of 2015, total exports from China expanded 27 percent to 62.13 million tons, the highest ever for the period, according to data compiled by Bloomberg.
Shares of Tata Steel surged 2.8 percent to 253.80 rupees at 1:22 p.m. in Mumbai as Steel Authority of India Ltd. climbed 0.6 percent to 58.40 rupees, and JSW Steel fell 0.7 percent to 889.90 rupees.