The Russian rouble has depreciated by 100 per cent over the last four weeks, from six roubles to a dollar to around 12 roubles against the dollar, which is will give the Russian producers a significant price advantage.

However, the extent of dumping from the Russian producers would, to a large extent, depend on their financial strength and ability to meet the requirement of the Indian end users in terms of width and quality.

Over the last two years, the domestic hot-rolled coil (HRC) producers have already seen significant amount of dumping from the CIS countries. Though they have made several representations to the ministries of steel and commerce, the Union government has not been able to impose any sort of anti-dumping duty to protect them.

During the current calendar, the HRC players have alsosaid that there has been dumping from South Korean steel giants like Posco.

A recent study by Crisil on the steel sector also states that India faces similar threats from the Japanese companies, too, as the recent South-East Asian economic crisis has taken a toll on the demand from these countries. The recent weakening of the yen has made Japanese hot-rolled and cold-rolled products more price competitive.

Currently, six per cent of India's steel demand is met by imports of which a majority of the volumes are accounted for by high quality grades of hot-rolled and cold-rolled products.

The quality of steel imported from South Korea and Japan is expected to meet Indian requirements and such product inflows into the country are expected to exert a downward pressure on the prices earned by local manufacturers, the Crisil report says.

Consequently, Indian steel producers can compete with steel imports from South East Asia with a minimal price cushion. The study finds that Indian steel producers enjoy aminimal price differential relative to imports until the international prices of HRC drops to around $230 per tonne at a rupee/dollar rate of 43.

Currently, HRC imports from East Asia are at around $230 per tonne and the exchange rate is hovering at around Rs 42.50, creating additional pressure on the domestic manufacturers.

The present surplus supply in the domestic sector, and the comparatively large depreciation of the south-east Asian currencies that has reduced the competitive advantage of Indian exports, will not allow any further domestic price hikes in the short term.

As international steel prices in 1998 and 1999 are expected to remain soft, as there will not be much demand from the East Asian countries, and almost no domestic price rise, the sales realisation of Indian steel companies will remain weak over the next two fiscals.