Steel exports from India will go down by 40% because of duties: CRISIL

20 Jun 2022 , 02:32 PM

According to CRISIL, India’s steel exports are likely to drop by 40% to 12 million tonnes (MT) in the current fiscal year as a result of the government’s duty-related actions last month.

The agency stated on Monday (20-06-2022) that completed steel exports hit a new high of 18.3 million tonnes in the 2021-22 fiscal year, and prices were at all-time highs.

On May 21, the government stated that customs duties on some steel industry raw materials, such as coking coal and ferronickel, would be waived. In addition, the tax on iron ore exports was increased by up to 50%, and the duty on a few steel intermediates was raised to 15%.

“Following the imposition of a 15% export levy on certain finished steel products last month, India’s steel exports are expected to tumble 35-40% to 10-12 million tonnes this fiscal. This fiscal year, iron ore and pellet exports will decline, as will domestic pricing “According to the CRISIL study report.

Last fiscal year, steel exports hit a new high of 18.3 MT. However, due of the difficulties created by the current Russia-Ukraine war, it will continue to gain traction, as Russia is a major exporter of steel, coking coal, and pig iron.

Furthermore, the European Union’s (EU) decision to increase India’s export quota amid a widening price difference between steel prices in the two geographies boosted local steel producers and mitigated the impact of the EU’s 25% tax on steel imports, according to the research.

However, while steel companies made large profits overseas, local demand increased by 11% year over year, pushing domestic prices to all-time highs. As a result, building prices have risen dramatically, prompting numerous price increases by vehicle, consumer appliance, and durables manufacturers to pass on the cost increases.

The increase in export duties was aimed at lowering inflation. CRISIL Research Director Hetal Gandhi stated “As completed steel exports decline, the duty-driven price adjustment would increase steel availability in the local market. This will have a direct influence on India’s export volume this fiscal year. Steelmakers will try to get around the tariffs by increasing shipments of alloyed steel and billets, but this will not be enough to compensate for the loss of completed steel exports.”