Page 64 - Steel Tech India eMagazine Volume April 2022

VOL. 16 • NO. 3 • April 2022

duty on a range of finished steel products, both long semis out of the ambit of export duties. therefore,
and flat products account for almost 95% of India’s the export of semis, which declined by 26% year-on-
overall finished steel exports in FY21 and FY22 and year (Y-o-Y) in FY2022 to 4.9 Mt is likely to witness a
would render exports significantly less attractive going significant increase in the current fiscal.
forward, which in turn could exert pressure on domestic In the case of iron ore, though the increased export
steel prices and industry capacity utilization levels.
duty is substantial and is incrementally positive from the
On the raw material side, the Government has perspective of better availability of domestic iron ore,
increased the export duty on 58% and above Fe grade it may not be a material shock-absorber as it affects
iron ore fines and lumps from 30% to 50% and for iron the economics of only less than 15% of total iron ore
ore pellets, the duty will benow 45% from earlier zero that was exported by domestic miners in FY2022. Over
duty. the import duty for coking coal and coke has 86% of the iron ore exported by miners in FY22 was
been reduced to zero from earlier level of 2.5% and 5% in the below 58% Fe grade category, which anyway
respectively. the duty for Ferronickel has been made has limited use in domestic steelmaking without further
zero from earlier 2.5%. processing through beneficiation.

In FY2022, Indian mills recorded a 25% Y-o-Y growth With various downstream industries trying to cope with
in finished steel exports as they took the benefit of the adverse impacts of runaway commodity prices,
elevated seaborne prices. europe, Vietnam and the domestic steel demand declined by 7.2% month-
Middle east were the three largest destinations for on-month in April leading to domestic hot-rolled-coil
Indian steel exports, together accounting for around (hRc) prices contracting 12% over the high watermark
50% of India’s overall steel exports, including semis. recorded in the first week of April. Nonetheless, with
It is felt that many of these destinations would become domestic and imported coal prices continuing to remain
less attractive now as mills evaluate the economics of elevated, leading to significant input cost inflation, and
a higher duty. domestic demand remaining muted, the imposition of
the export duty has come at an unpleasant time for
Additionally, with steel export offers for deliveries to
europe being higher by 10-11% over more competitive steelmakers.
markets like South-east Asia and the Middle east, the Following the export duty levy, the pace of execution of
adverse impact of the new export duties on steel exports some of the major expansion projects announced by
to europe would be relatively less severe than that of leading steel plants in India,could slow down as mills’
South-east Asia and the Middle eastern markets. cash flows could weaken significantly going forward if
the export duty is maintained over the medium term.
Interestingly, the Government has chosen to keep steel

62 Steel tech