The Indian Steel Association (ISA) has requested authorities re-think the imposition of steel export duties as these will discourage investment into steelmaking capacity needed to meet domestic demand growth.
The duties will only send a negative signal to investors in the steel sector and will adversely impact capacity utilisation, ISA tells Kallanish.
“The steel industry in India has made largest investment commitments, ranging from 36% to 40% of total investments committed by the entire manufacturing sector,” the association comments. “These investments in capacity building are needed to achieve the Atmanirbhar Bharat [self-reliant] vision of the Hon’ble Prime Minister.”
“In light of this decision, new capacities’ creation may get impacted as they would be seen as uneconomical, thus affecting the much-awaited investment against the PLI scheme for speciality steel,” ISA adds.
The decision will dent the nation’s place in the global steel market, creating opportunities for other countries to take the place of India. According to ISA, rebuilding the lost ground later may take a very long time, as the supply chain will be disrupted, while India’s credibility as a reliable exporter will take a hit.
To control the cost of production, the association suggests the government look into the volatility of coking coal import prices. According to ISA, costlier coal has been the main cause of steel price hikes globally over the past year.
“An oligopolist competition exists in the import of coking coal. It has been highly volatile. Coking coal prices peaked at $670/tonne in March 2022 and it is currently at $525/t. The impact of coking coal, iron ore, ferroalloys and fluxes, etc., alone have caused a sharp increase in input cost from $225 to $250,” ISA says.
Despite steel prices sliding globally, production costs remain elevated. The Indian duties may have a major impact on the entire supply chain in the long term, the steel association concludes.
ArcelorMittal Nippon Steel India chief executive Dilip Oommen, who is also ISA president, told Reuters around 90,000 tonnes/month of the firm’s exports will be hit by the new duties.
Effective 22 May, the ministry has introduced a new 15% duty on exports of pig iron, hot rolled coil, cold rolled coil, bars and rods, and stainless steel. These products fall under HS code headings 7201, 7208, 7209, 7210, 7213, 7214, 7219, 7222 and 7227 (see Kallanish passim).
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