India’s steel exports are expected to fall by 40 percent to 12 million mt by the end of the current fiscal year 2022-23, as a result of the duty-related measures taken by the government last month, rating agency CRISIL said in an industry report on Monday, June 20.
The exports of finished steel had reached a record high of 18.3 million mt in the 2021-22 financial year and the prices were at their all-time high.
On May 21, the government announced the waiving of customs duty on the import of some raw materials, including coking coal and ferronickel, used by the steel industry. Also, the duty on exports of iron ore was hiked by up to 50 percent and for a few steel intermediaries the export duty was raised to 15 percent.
“India's steel exports will drop 35-40 percent to 10-12 million mt this fiscal year following the 15 percent export duty imposed on several finished steel products last month. Exports of iron ore and pellets will also fall this fiscal year, and lower domestic prices,” the CRISIL report said.
Steel exports had reached a record high of 18.3 million mt last fiscal year. However, they will continue to see momentum because of the disruptions caused by the ongoing Russia-Ukraine conflict, with Russia a key exporter of steel, coking coal and pig iron.
In addition, the European Union's (EU) move to raise India's export quota - amid a widening differential between steel prices in the two geographies - benefited Indian steelmakers, and limited the impact of the 25 percent tariff on steel imports imposed by the EU, the report said.
But while steel firms enjoyed strong realizations overseas, domestic demand grew 11 percent year on year, driving domestic prices to all-time highs. This led to soaring construction costs and multiple price hikes by makers of automobiles, consumer appliances and durables, aimed at passing on the increase. The hike in export duty was aimed at curbing this inflation, the report said.