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Government may phase out export duty on steel, flat products may come first: Sources

Industry experts have been urging the government to roll back the levy as it increases uncertainty in the export market. They maintained that the duty was a double whammy as it put the export margin under pressure at a time when the prices had started correcting, taking cues from falling international coking coal rates

August 09, 2022 / 10:30 AM IST
Flames rise from a wagon loaded with coke at the Steel Authority of India's Rourkela Steel Plant in Rourkela district, Odisha.

Flames rise from a wagon loaded with coke at the Steel Authority of India's Rourkela Steel Plant in Rourkela district, Odisha.

Steelmakers in the country expect some relief soon as the government is likely to roll back export duty on some steel products, if not all.

Senior industry executives told Moneycontrol that the government is likely to withdraw the export duty on steel in phases. The government is believed to be considering rolling back export duty on flat products first, while the export duty on building construction steel like Rebars, wire roads, and roofing sheets would continue.

Flat steel products include the likes of the hot rolled coil (HRC), cold rolled coil and plates among other things.

In an attempt to curb spiking inflation, the government on May 22 imposed an export duty of 15 percent on select pig iron, flat-rolled products of iron or non-alloyed steel, bars and rods and various flat-rolled products of stainless steel and another 45 percent on iron ore pellet. Similarly, the export duty on iron ores and concentrates was raised to 50 percent from 30 percent.

JSW Steel’s Joint Managing Director Seshagiri Rao had told Moneycontrol that he expects the export duty to be rolled back before September end. But two other senior industry players said it could be sooner.

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Watch | JSW Steel Joint MD and Group CFO Seshagiri Rao on export duty impact, falling rupee, and Q2 expectations

An email query from Moneycontrol to the Ministry of Finance remained unanswered. Media reports have been rife that the ministry is considering export duty upon the recommendation of the Steel Ministry.

Industry experts and officials have been urging the government to roll back the levy as it increases uncertainty in the export market. They maintained that the duty was a double whammy for the industry as it put the export margin under pressure at a time when the prices had started correcting, taking cues from falling international coking coal prices.

“I am very confident that government would soon roll back the measure since part of the industry’s capex has been committed towards creating capacities which could be exported and the government also stands to lose foreign exchange,” a senior executive from a steel company said on condition of anonymity.

ALSO READ: Export duty on steel dragging industry, may hurt capex more: Industry officials 

Alok Sahay, Secretary General of Indian Steel Association, at an event last week said the imposition of export duty on steel has ended up hurting steel production by 8-10 percent and impacted the country’s foreign exchange inflows.

HRC price gfx

“The prices have now come close to the bottom level and have started causing injury to the steel industry, which is also evident from Q1 result of steel industry majors. The government has lost huge foreign exchange revenue and overall business sentiment has gone down,” Sahay said.
Nickey Mirchandani Assistant Editor at Moneycontrol covering Materials and Industrials space which includes Metals, Cement and Infrastructure sector. She’s a presenter and a stock market enthusiast with over 12 years of experience who loves reading between the lines and scanning through numbers. Before joining Moneycontrol, she was an Associate Research Head at Bloomberg Quint/ BQ Prime, where she wrote analytical pieces, anchored multiple interviews and a show called “ Market Wrap”.
first published: Aug 8, 2022 09:59 pm
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