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News: As per media sources, US is looking to impose stringent rules on imports of metals from Mexico in order to prevent metal origination from China entering its territory. As per new rules outlines, for duty free steel imported from Mexico it has to be melted and poured in Mexico, US and Canada. It has an import duty of 25% for steel imported/originated from China. Similarly, on the aluminium side, the metal imported from Mexico must not have primary aluminium originating in China, Russia, Belarus or Iron. It has an import duty of 10% on aluminium imports.
Views: The move seems to be more politically motivated than economic merit as the quantum of metal imported from Mexico with origination elsewhere is ~13% for steel and ~6% for aluminium. For the Indian steel players, it’s a two-point implication wherein on one hand they will have an opportunity to increase exports of metals from India to US with higher tariffs on Chinese produce while on the other hand higher Chinese production will find a way to enter Indian markets putting pressure on realisations with India turning net importer of Steel in last fiscal year. We expect industry to lobby for some protectionist tariffs against Chinese imports to safeguard its interest, which when implemented should be positive for Indian players.
Impact: Neutral