Safeguard Duty Investigation on Jindal Pipe Case Initiated
[Safeguard
Initiation F.No. D-22011/17/2012 dated 22nd
April 2013]
Sub: Initiation of Safeguard Investigation
concerning Imports of “Seamless pipes, Tubes and Hollow profiles of iron or non
–alloy steel” into India.
An application has been filed before me under Rule 5 of the Custom
Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997, by M/s.
Jindal Saw Ltd, Jindal Centre, 12 Bhikaji Cama Place, New Delhi -110066 and M/s
ISMT, Lunkad Towers, Viman Nagar, Pune 411014 for imposition of Safeguard Duty
on imports of “Seamless pipes, Tubes and Hollow profiles of iron or non –alloy
steel” into India to protect the domestic producers of Seamless Pipes and Tubes
against serious injury /threat of serious injury caused by the increased
imports of Seamless pipes, Tubes and Hollow profiles of iron or non –alloy
steel.
2. Domestic
Industry: The application has
been jointly filed by M/s. Jindal Saw Ltd, Jindal Centre, 12 Bhikaji Cama
Place, New Delhi -110066 and M/s ISMT, LunkadTowers, Viman Nagar, Pune 411014
for imposition of Safeguard Duty on imports of Seamless pipes and tubes. The
applicants account for more than 50% of the total production of Seamless pipes
and tubes in India. The petition is also supported by M/s Maharashtra Seamless
Ltd (MSL), Jindal Corporate Centre, Plot No.30, Institutional Sector -44,
Gurgaon -122001.
3. Product
Involved: The present
application is filed for imposition of Safeguard duty on imports of Tubes,
Pipes and Hollow Profiles, Seamless of iron, alloy or non alloy steel(other than cast iron and stainless steel) whether hot
finished or cold drawn or cold rolled, of external diameter not exceeding 273.1
mm (O.D) with the tolerance as specified under relevant standards (herein after
referred to as Seamless Pipes and Tubes) excluding:
1. Seamless
alloy–steel pipes, tubes and hollow profiles of specification ASTM A213/ASME SA
213 and ASTM A335 /ASME SA 335 or equivalent BIS/DIN/BS/EN or any other
equivalent specifications
2. Non
API and Patented Premium Joints/Premium Connections/Premium Threaded Tubes
& Pipes of rades Q-125, 13CR,L-80,P110,C-90C-95,T-90
&T-95
3. All
13 Chromium (13CR) Grades Tubes and Pipes not included in(2)
above and
4. Drill
Collars.
The product under consideration is classified
under Customs sub –heading No.73.04 of Chapter 73 of the Customs Tariff Act
1975. An indicative list of the various classifications under which the product
under consideration may be classified into is provided below as the product
under consideration is imported under 8 digit level classification:-
73041910;73041920;73041990;73042310;73042390;73042910;73042990;73043111;73043119;
73043121;73043129;73043131;73043139;73043911;73043919;73043921;73043929;73043931:
73043939;73045110;73045120;73045130;73045910;73045920;73045930;73049000:
4. Period
of investigation (POI): Present
application is a fresh case based on serious injury /threat of serious injury
to domestic industry caused by increased import of Seamless Pipes and Tubes
into India. The POI in the case has been taken from 2009-10 onwards till
2012-13.
5. Source
of information: The import
data for the product under consideration has been taken from DGCIS as submitted
by the applicant till December, 2012 and same has been relied upon and taken
into consideration for analysis. The domestic data from 2009-10 to 2012-13(up
to June, 2012) has been submitted by the applicant whereas the data up to
December, 2012 has been verified by onsite visits to the manufacturing units of
the domestic industry by the department. The verified data has been taken into
consideration for injury analysis.
6. Increased
Imports: Imports of Seamless
Pipes and tubes into India have shown significant increase. The data relating
to imports of Seamless Pipes and Tubes from 2009-10 onwards as per DGCIS data,
is as under:
|
Financial
Year |
Total
Import (MT) |
Import
Indexed |
|
2009-10 |
307581 |
100 |
|
2010-11 |
344829 |
112 |
|
2011-12 |
425194 |
138 |
|
2012-13 (Q1) |
99880 |
|
|
2012-13 (Q2) |
76118 |
|
|
2012-13 (Q3) |
104335 |
|
|
2012-13 (Annualized) |
373777 |
122 |
It is evident that imports of the product under consideration have
sharply increased during the injury period. The imports have increased from
307581 MT in 2009-10 to 373777 MT till 2012-13 (Annualized.) recording an
increase of 22 %. Even though there is a decline in 2012-13(annualized) over
2011-12, but quarter wise analysis in 2012-13 till Q3 shows a sharp rising
trend from Q2-Q3 2012-13 on absolute basis.
7. Serious
Injury to the Domestic industry: The applicants (hereinafter referred to as DI) have claimed that the
increased imports of Seamless Pipes and Tubes have caused and are threatening
to cause serious injury to the domestic producers of Seamless Tubes and Pipes.
The growth of DI has turned negative in recent period and is unable to increase
its production and sales in tandem with the rate of increase in consumption.
The threat of serious injury to domestic industry is clearly visible from the
data provided by the applicants as detailed below:
a) Production:
The domestic production of DI increased up to
FY2011-12, but declined drastically thereafter. The production index of
Domestic Industry fell to 116 in 2012-13(Annualized) from 142 in FY 2011-12, as
shown below:
|
Financial
Year |
Production
(MT) |
Production
Indexed |
|
2009-10 |
224216 |
100 |
|
2010-11 |
283619 |
126 |
|
2011-12 |
318968 |
142 |
|
2012-13(Dec.
2012) |
195752 |
|
|
2012-13(Annualized) |
261003 |
116 |
b) Increased
Imports w.r.t total production: Seamless Pipes and Tubes are imported into India from a number of
countries, and mainly from China and Italy. The imports of Seamless Pipes and
Tubes have shown an increasing trend in absolute terms as well as compared to
the total production. The imports and production of Seamless Pipes and Tubes
during financial year 2009-10 to 2012-13 are as under:
|
Financial
Year |
Total
Imports (MT) |
All India
Production (MT) |
% of
Increase in import with respect to production |
|
2009-10 |
307581 |
422820 |
73 |
|
2010-11 |
344829 |
538554 |
64 |
|
2011-12 |
425194 |
583780 |
73 |
|
2012-13
(Annualised) |
373777 |
417511 |
90 |
The Imports have increased from 307581 MT in 2009-10 to 373777 MT in
2012-13(Annualised) which shows an increase of 22%. The import with respect to
total production was 73 % in 2009-10 and increased to 90% in
2012-13(Annualised).
c) Market
Share & Changes in levels of Sales: The market share of the DI has declined sharply in the recent period
whereas share of the import has increased significantly. Applicants had a
market share of 26% in 2009-10, it has increased to 27 % in year
2010-11.However, in subsequent years it fell to 25 % in 2011-12 and further to
23% during 2012-13. During the same period, market share of import has
increased from 55% in 2009-10 to 64% in 2012-13(Annualized).
|
In MT |
||||||
|
Financial
Year |
Import |
Sales of
DI |
Sales of
other Indian Producers |
Total
Demand |
% of
Market Share |
|
|
|
|
|
|
|
DI |
Import |
|
2009-10 |
307581 |
143017 |
104823 |
555420 |
26 |
55 |
|
2010-11 |
344829 |
168740 |
101020 |
614589 |
27 |
56 |
|
2011-12 |
425194 |
170826 |
93386 |
689406 |
25 |
62 |
|
2012-13(Dec.) |
280333 |
101126 |
|
|
|
|
|
2012-13
(Annualized) |
373777 |
134835 |
77910 |
586522 |
23 |
64 |
Though the sales of the domestic industry increased up to FY 2011-12,
it declined in the most recent period from 170826 MT in 2011-12 to 134835 MT in
2012-13(annualized). The demand of the product increased significantly from
555420 MT in 2009-10 to 586522 MT in 2012-13(annualized). It clearly shows that
the DI suffered noticeable loss in sales as well as market share, caused by
increased imports
d) Capacity
Utilization: The
increasing imports are resulting in significant idling of production capacity
of the domestic producers. The capacity utilization by the DI has sharply
declined in recent period from 60% in 2009-10 to 38% in 2012-13 as can be seen
in the Table below:
|
Financial
Year |
Installed
Capacity(MT) |
Production(MT) |
Capacity
Utilisation (%) |
|
2009-10 |
375000 |
224216 |
60 |
|
2010-11 |
685000 |
283619 |
41 |
|
2011-12 |
685000 |
318968 |
47 |
|
2012-13(Annualized) |
685000 |
261003 |
38 |
e) Profit/loss
–The profitability of the domestic industry
has steeply deteriorated and the domestic industry is now suffering financial
losses. This is evident from the table below:-
|
Financial
Year |
Profitability
(Indexed) |
|
2009-10 |
100 |
|
2010-11 |
76 |
|
2011-12 |
102 |
|
2012-13(Dec).
2012) |
23 |
f) Inventories
– In view of surging imports and loss of
market share, the inventories with the domestic industry have also increased
significantly. The table below depicts the inventory levels which have
witnessed a massive surge from 5691 MT in 2009-10 to 14170 MT in
2012-13(December) reflecting the plight of the domestic industry.
|
Financial
Year |
Inventory
(in MT) |
|
2009-10 |
5691 |
|
2010-11 |
8805 |
|
2011-12 |
9583 |
|
2012-13(Dec.
2012) |
14170 |
g) Productivity
& Employment: There is increase in the level of employment
keeping in tandem with increasing capacity. The productivity too had been
rising till 2011-12 but has since gone down during 2012-13. Due to loss of
market share and accumulation of high inventory, the DI had to stagger the
production and face drop in productivity.
|
Financial
Year |
Production
(MT) |
Employment
(Nos.) |
Productivity
per employee(MT) |
|
2009-10 |
224216 |
2245 |
100 |
|
2010-11 |
283619 |
2388 |
118 |
|
2011-12 |
318968 |
2567 |
124 |
|
2012-13(Annualised) |
261003 |
2469 |
105 |
8. The DI has requested in their application for
immediate imposition of Safeguard duty on imports of Seamless pipes and tubes
into India for a period of four years. They have also requested for imposition
of provisional Safeguard duty in view of the steep
deterioration in performance of the domestic industry due to serious injury and
threat to serious injury as a result of increased imports of the product under
consideration.
9. The application has been examined
and it has been found that prima facie increased imports of Seamless Pipes and
Tubes have caused and are threatening to cause serious injury to the domestic
producers of Seamless Pipes and Tubes and as such it has been decided to
initiate an investigation in the matter 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.
Telephone: 011- 23741537
FAX: 011-23741542
E-mail: dgsafeguards@nic.in
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 21 days from the date of this notice.