News & Updates

These decisions were taken amidst’s steep fall in October steel exports, as per Steel Ministry.

Steel industry on Saturday hailed withdrawal of export duty. 

The government on late Friday notified withdrawal effective Saturday. Duty was imposed in May this year.

As per the Finance Ministry notification, exports of iron ore lumps and fines with ‘less than 58 per cent Fe’ will attract NIL export duty. 

In the case of iron ore lumps and fines with more than ’58 per cent Fe’, the rate of duty will be 30 per cent. Exports of iron ore pellets will attract NIL export duty. Similarly, exports of pig iron and steel products (classified under Harmonised System or HS 7201, 7208, 7209, 7210, 7213, 7214, 7219, 7222 & 7227) will attract NIL export duty.

“The current measures will provide a fillip to the domestic steel industry and boost exports,” Finance Ministry said in a statement. In May, the government had levied an export duty charges varying from 15 per cent for steel exports to around 50 per cent iron-ore (including concentrates).  Steel prices in domestic markets have been falling ever since

Further, import duty on Anthracite/PCI & coking coal and ferronickel will be 2.5 per cent, while it will be 5 per cent for coke and semi-coke. These were given exemption in May.

Duty withdrawal has been initiated at a time when India’s steel exports dipped 66 per cent in October – the highest for this fiscal – to 360,000 tonnes on weakened global demand and higher prices compared with competitors. Exports in October 2021 were 1.05 million tonnes, according to Steel Ministry data.

The Indian Steel Association in a tweet said, the move (reducing export duty on iron ore and removal of levy on stainless steel) “will go a long way in correcting India’s balance of trade”.

The 15% export duty imposed in May on a range of items covering around 95% of the finished steel export basket is likely to stay till December as the steel ministry feels that any roll-back of the duty at this stage may suppress domestic prices.

“Duty rollback may also give unintended signals to market to prefer exports over domestic demand,” the ministry said in a note.

The ministry is confident domestic demand will go up after the monsoon, particularly because of governments thrust to building infrastructure across the country, and this will put upward pressure on prices.

At the same time, cost of production for the domestic steel makers will rise as prices of major inputs such as coking coal and iron ore are expected to move up.

“In view of this, reduction in duty may be considered after stabilisation of the present volatile market condition, cooling of inflationary pressures and the steel price trends in the next quarter,” the ministry said.

In FY 22, India’s steel exports at 18.37 million tonnes (MT), comprising both finished and semi-finished steel, was the highest both in absolute terms and in proportion of production – 11.9% in case of finished steel and 15.3% in case of crude steel.

“Higher exports may have, in part, helped sustain high prices of steel during FY22,” the ministry believes. Export duty was imposed on eleven items including hot-rolled coil (HRC) and cold-rolled coil (CRC) on May 21 to contain domestic prices of steel.

Within 20 days of the duty imposition, prices declined by 9-14% by June 10, but the pace of decline moderated since then. The decline was in the range of 5-17% by August 19 compared with the May 21 price. But the decline in domestic prices was lower than the price reduction in the range of 20-39% in the EU and US over the same period.

The JSW Group plans to invest Rs one lakh crore in Karnataka over the next five years, its Chairman Sajjan Jindal said on Wednesday. In his address to the inaugural function of ''Invest Karnataka 2022", the State's Global Investors' Meet (GIM) here, he also requested the state government to consider mineral auctions.

Jindal said the Group has so far invested over Rs one lakh crore in Karnataka. "And over the next five years, we have plans to invest additional Rs one lakh crore in Karnataka

The investment would head into expansion of its steel plant, and renewable energy and port infrastructure development space.

The Group's Ballari steel plant in Karnataka has grown to be the biggest in India and would soon become the biggest steel plant in the world, Jindal noted.

Urging the state government to consider mineral auctions, he said the move would further encourage investment in the manufacturing sector and support Karnataka's growth trajectory.

In this context, he praised the Odisha government for being the "most aggressive" State in auctioning "the mineral assets, the mines".

"When I speak for the evolution that is taking place in steel making, time is of essence. As minerals like iron ore will always be not needed for production of steel, hence, it's imperative that these assets are monetised at the earliest," Jindal said.

Operating conditions for steel manufacturers have deteriorated with a further fall in steel prices and rising coking coal prices. 

The demand environment continues to remain muted. Domestic hot-rolled coil prices fell by Rs700 per tonne week-on-week to Rs55,200 per tonne, said a report by Nomura Financial Advisory and Securities (India) dated 12 September quoting SteelMint. 

They further added that the average price in September so far is 3% below the average seen in August.

Further, there is increased pressure on margins due to a sharp rise in coking coal costs after a brief period of softening trend. However, on the bright side, iron ore prices continue to remain stable.

Even so, a meaningful pick-up in demand for the metal is key. The September quarter (Q2FY23) is expected to bear the brunt of seasonality and the demand is likely to improve thereafter.

“Our channel checks indicate that dealers are adopting a cautiously optimistic approach towards demand revival in H2FY23," said analysts at Edelweiss Securities in a report on 9 September.

Meanwhile, the Indian producers can capitalize on the opportunities in the export markets against the backdrop of the ongoing energy crisis in Europe, point out analysts at Edelweiss Securities.

But due to the levy of export duty on finished products, there is increased potential for the export of semi-steel. The export duty is a key overhang on stocks of steel companies and a positive development on that front would aid investor sentiments. 

Shares of Tata Steel, JSW Steel, and Jindal Steel & Power are down by 13-28% from their respective 52-week highs.

Amidst anaemic demand, both locally and in the export market, the domestic steel majors have not just cut down their production, but preponed their maintenance shutdown work at some facilities to rein in the rising inventory and also to keep the plant future-ready, industry sources said. Depending upon the size, a blast furnace usually requires around 20 days of a maintenance shutdown. The gap between one maintenance work and the other relies on the health of the furnace.

“The root of the problem is lack of demand. There is hardly any demand domestically and exports have also dried up. While we used to keep 2-3 days of stock earlier, now we have 15-20 days of inventory. The industry is in a very critical situation now. Until demand picks up, there will be no respite. And, when that happens is anybody’s guess,” said an industry source.

The government needs to step up its investment in infrastructure to bail the steel industry out of the current situation, he said.

While one industry source said that the steel majors are maintaining the highest level of capacity utilisation now, a senior executive in another firm said that those companies which used to export a sizeable of their production till recently have now cut down their production level.

“High inflation is the real culprit. When there is inflation, there will be a contraction of demand. This is not just in India, but in other parts of the world as well. We have reduced steel prices in line with the input costs, what else can we do?” said the executive.

Hovering around Rs 36,750 to Rs 39,800 per tonne between January and July 2020, prices of the benchmark product hot-rolled coil (HRC) started picking up from Rs 38,750 a tonne in the first week of August 2020 to reach its peak at Rs 78,800 a tonne in the first week of April this year. Though the rise was not always steady, prices never fell below Rs 53,750 per tonne in 2021.