Elixir Securities Limited – Flash Note

Karachi, December 11, 2017 (PPI-OT): International Steels Limited – Preliminary Determination of Anti-Dumping Investigation of Colour Coated Steel Coils/Sheets Imports

National Tariff Commission (NTC) initiated anti-dumping investigation against imports of colour coated steel coils/sheets imports originating from China and South Africa on 10th June, 2017 on application filed by International Steels (ISL).

NTC in its preliminary determination concluded that there was 1) significant increase in volume of dumped imports, 2) significant price under cutting, and 3) material injury caused on account of loss of market share and negative effect on growth.

NTC estimated dumping margins of 2.52%-6.81% and 42.65% for Chinese and South African exporters. However, NTC did not impose provisional anti-dumping duty at the moment.

We reckon, that anti-dumping duties on imports will be close to the dumping margins. In this regard, we have provided ISL’s FY19F EPS sensitivity to different level of anti-dumping duties and its pass through. Note that ASL does not produce colour coated steel coils/sheets.

We have estimated the earnings impact based on incremental revenues assuming colour coated coils capacity utilization at 80% in line with overall estimated utilization for the year, whereas the revenues from colour coated steel coils accounted for just 2% of topline (estimated colour coated coils utilization of 15%) in FY17.

We believe that pass through of duties would likely remain modest in initial months but would help increase market share and bolster primary margins.

You May Also Like