Indian flat steel exports have slackened during the past week amid rising concern over accumulated refund of taxes on completed consignments, the strengthening of the local currency and rising competition in key markets, traders said on Monday, September 23.
The traders said that large Indian steel mills have marginally lowered hot rolled coil (HRC) export offers by $5/mt to the range of $425-430/mt FOB. The Indian rupee, which has appreciated from a low of INR 72.50 to the US dollar to around INR 71 to the dollar during the past week has also limited the ability of exporting steel mills to more aggressively price offers, the traders said.
According to the traders, both Chinese and Indian steel mills are facing rising inventories and there is a tussle for buyers and Indian steel mills have been unable to conclude significant transactions in the face of competition with Russia and other countries.
Sources said that both Tata Steel’s and JSW’s offers to the EU have ranged at around $430/mt FOB but they have been able to conclude small transactions only after confirming discounts of $5/mt on FOB basis.
“Though all domestic steel mills have been facing an unprecedented increase in inventories, their recent thrust on overseas shipments to control stock-carrying costs has slackened over the past week, largely owing to the accumulated pending refunds of taxes within the scope of the Integrated Goods and Services Tax (GST) already paid on inputs for export production,” a steel company official said.
“Though the government has announced a fully automated refund of taxes paid on export production, this would only be effective from January 1, 2020, and until then the existing system of submitting claims for refunds will continue, and there is a big backlog of such refunds pending putting additional working capital strain on domestic exporting steel mills,” the official added.