India has implemented a safeguard duty on imports of ferro-molybdenum from South Korea for the next two years. The decision aims to protect domestic producers by levying a 5% duty for the first year and a 3.75% duty for the second year. It is unclear whether this move will enable Indian converters to expand production capacity.
India has taken a notable step to protect its domestic industry by imposing a safeguard duty on ferro-molybdenum imports from South Korea. Effective from October 10, 2023, to October 9, 2024, a 5% duty will be levied, followed by a 3.75% duty until October 10, 2025.
This decision comes after India's director-general of trade remedies recommended the duty in late May. The recommendation followed an investigation that began in September 2022, instigated by India's ferro-alloy producers association. The investigation revealed that duty-free imports from South Korea had led to underutilization of domestic production and had caused significant damage to the industry.
Indian converters are optimistic that the new duty will help them increase their market share in the short term. However, they expressed reservations about whether this will enable them to expand their production capacity, given the current low demand from India's steel industry.
South Korea has been India's largest overseas supplier of ferro-molybdenum. Data indicates that India imported a total of 2,010 metric tons of ferro-molybdenum between January and July, with 1,238 metric tons coming from South Korea. However, there was an 11.5% decrease in imports from South Korea compared to the previous year, likely due to uncertainties around the duty imposition and weak demand.
One unexpected side effect of this duty could be a shift in India's import pattern. Some traders now predict an increase in imports from Thailand, which remains exempt from the duty. Thailand's exports to India marked 120.88 metric tons in January-July, up from zero the previous year.
The imposition of the safeguard duty is a strategic move aimed at providing a lifeline to India's struggling domestic ferro-molybdenum industry. However, it remains to be seen whether this measure will be sufficient to stimulate expansion in production capacity, especially in light of low demand from the steel industry.