Steel Association writes to Sitharaman, seeks withdrawal of export duty

Industry should be allowed to fulfill the orders without export duties, say companies.

The Indian Steel Association (ISA) representing major companies has written to Finance Minister Nirmala Sitharaman, seeking withdrawal of export duty on iron and steel intermediates.

The association said it welcome the government ending import duty on key raw materials--coking coal, PCI coal and ferro-nickel--but the “sudden” imposition on a wide range of steel products would bring exports to a halt.

The association has also raised that letters of credit had been raised for about 2 million tonnes of orders and the industry should be allowed to fulfill the orders without export duties. It sought three months’ time for this.

The association is also likely to meet Sitharaman, as it warned that China could gain from India’s loss.

The capex plans, according to the industry, will also get impacted and in turn it will impact employment generation.

The 15 per cent export levy has come as a huge blow to the industry. An ICRA report on Monday said that almost 95 per cent of India’s finished steel export basket had been hit with 15 per cent export duties and domestic steel prices could potentially correct by 10-15 per cent in the coming months as demand enters the seasonally weak monsoon quarter.

Though steel mills are yet to correct prices, SteelMint data showed that prices in the trade segment in hot rolled (HR), cold rolled (CR) and rebars fell by Rs 3,000-4,000 per tonne on Monday after the export levy.

However, a senior steel company executive pointed out that trade prices change on a daily basis and it was likely to recover.

The executive also pointed out that steel prices had corrected since peak levels. The average monthly trade price for hot rolled coil (HRC) in April, as per SteelMint, was at Rs 76,000 a tonne and the average till May 17 had stood at Rs 71,000 a tonne.

The reduction in import duty is expected to moderate raw material prices to an extent but steel spreads are expected to be impacted still.

The ICRA report mentioned that though raw material prices could moderate as import duty on coal and coke has been waived and availability of domestic iron ore could improve following an increase in export duty on 58 per cent and above Fe grade iron ore from 30 per cent to 50 per cent, steelmakers could see spreads sequentially contract by $75-$100/ tonne in Q2FY2022.