New Delhi: Of India steel According to data analyzed by Crisil Research, exports are expected to decline by 35-40% this fiscal to 10-12 million tonnes after the 15% export duty imposed on several finished steel products last month.
Steel exports, which hit a record high of 18.3 million tonnes in the last fiscal, continue to see momentum due to the disruption caused by the Russia-Ukraine conflict.
Russia major exporter of steel, coking coal and pig Iron, In addition, the European Union (EU) is taking steps to increase India’s export quota – amid a widening gap between steel prices Domestic steel makers benefited – in two geographies, and limited the impact of the 25% tariff on steel imports. The European Union,
“The duty-driven price correction will improve steel availability in the domestic market as the export of finished steel is declining. This will have a direct impact on India’s export volume in the current financial year. Hetal Gandhi, director, CRISIL Research, said steel makers would try to reduce duties by increasing exports of alloys and billets, but this is unlikely to offset the loss of finished steel exports.
Steel firms enjoyed realization of fat overseas, with domestic demand up 11%, pushing domestic prices to an all-time high, the report said. This resulted in increased manufacturing costs and several price hikes by manufacturers of automobiles, consumer equipment. To pass on the increase in durable goods, thereby reducing domestic demand.
The increase in export duty was aimed at curbing inflation.
The government raised the export duty on iron ore to 50% and on pellets to 45%, as well as reduced the import duty on coking coal, pulverized coal injection (PCI) coal and coke from 2.5% to 0%.
“The duty revision will have a significant impact on export volumes of iron ore and pellets. Unlike steel, where specific grades were targeted, iron ore and pellets are effectively under a blanket export duty. The combined export volume is expected to see a sharp decline of 8-10 MT at present from 26 MT in the last fiscal and a sharp recovery in domestic prices, Crisil said.
Merchant miners have already slashed iron ore prices by 25-35% since the announcement.
The government was able to control the uncapped rally in domestic steel prices by imposing export duty on steel and iron ore. Steel prices (ex-factory), which averaged Rs 77,000 a tonne in April, had already cooled to Rs 4,000-5,000 a tonne in early May in line with global prices.
The imposition of duty has further pushed down the prices, as the current prices are lower by Rs 14,000-15,000 per tonne from the April peak.
Besides, global prices have also corrected.
Falling steel prices have helped improve domestic demand.
Auto production and manufacturing activity picked up in June. With the onset of monsoon, a seasonal moderation in demand is expected, which will put further downward pressure on steel prices. A correction in steel prices was already on the cards as global prices started to correct. The duty revision has eased the uncertainties associated with global markets and set the tone for a bullish recovery in the near term. By mid-June, prices are already at Rs 62,000-64,000 per tonne and a downward trend can be expected below Rs 60,000 per tonne. By the end of the fiscal year,” said Kaustav Mazumdar, associate director, CRISIL Research.
Steel exports, which hit a record high of 18.3 million tonnes in the last fiscal, continue to see momentum due to the disruption caused by the Russia-Ukraine conflict.
Russia major exporter of steel, coking coal and pig Iron, In addition, the European Union (EU) is taking steps to increase India’s export quota – amid a widening gap between steel prices Domestic steel makers benefited – in two geographies, and limited the impact of the 25% tariff on steel imports. The European Union,
“The duty-driven price correction will improve steel availability in the domestic market as the export of finished steel is declining. This will have a direct impact on India’s export volume in the current financial year. Hetal Gandhi, director, CRISIL Research, said steel makers would try to reduce duties by increasing exports of alloys and billets, but this is unlikely to offset the loss of finished steel exports.
Steel firms enjoyed realization of fat overseas, with domestic demand up 11%, pushing domestic prices to an all-time high, the report said. This resulted in increased manufacturing costs and several price hikes by manufacturers of automobiles, consumer equipment. To pass on the increase in durable goods, thereby reducing domestic demand.
The increase in export duty was aimed at curbing inflation.
The government raised the export duty on iron ore to 50% and on pellets to 45%, as well as reduced the import duty on coking coal, pulverized coal injection (PCI) coal and coke from 2.5% to 0%.
“The duty revision will have a significant impact on export volumes of iron ore and pellets. Unlike steel, where specific grades were targeted, iron ore and pellets are effectively under a blanket export duty. The combined export volume is expected to see a sharp decline of 8-10 MT at present from 26 MT in the last fiscal and a sharp recovery in domestic prices, Crisil said.
Merchant miners have already slashed iron ore prices by 25-35% since the announcement.
The government was able to control the uncapped rally in domestic steel prices by imposing export duty on steel and iron ore. Steel prices (ex-factory), which averaged Rs 77,000 a tonne in April, had already cooled to Rs 4,000-5,000 a tonne in early May in line with global prices.
The imposition of duty has further pushed down the prices, as the current prices are lower by Rs 14,000-15,000 per tonne from the April peak.
Besides, global prices have also corrected.
Falling steel prices have helped improve domestic demand.
Auto production and manufacturing activity picked up in June. With the onset of monsoon, a seasonal moderation in demand is expected, which will put further downward pressure on steel prices. A correction in steel prices was already on the cards as global prices started to correct. The duty revision has eased the uncertainties associated with global markets and set the tone for a bullish recovery in the near term. By mid-June, prices are already at Rs 62,000-64,000 per tonne and a downward trend can be expected below Rs 60,000 per tonne. By the end of the fiscal year,” said Kaustav Mazumdar, associate director, CRISIL Research.