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BUSINESS REPORT

THE TINPLATE COMPANY OF INDIA LIMITED

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 BIG BOOST FOR STEEL INDUSTRY!
GOVT HIKES EXPORT DUTY ON IRON
ORE, WAIVES IMPORT TAX ON SOME
RAW MATERIALS
15 per cent duty has been imposed on flat-rolled products of stainless steel of width
>=600mm, other bars and rods of stainless steel; angles, shapes and sections of
stainless-steel; bars and rods, hot-rolled, in irregularly wound coils, of other alloy
steel.

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On May 21st, Government of India in an attempt to improve availability of domestic steel and
reign in steel prices, imposed a 15% export duty on range of finished steel products. Earlier, the
manufacturers used to export more for the high profitability they got from selling these products
in the foreign market. Due to this the availability of these products in the domestic market was
decreasing due to which the price of these in the domestic market was very high and inflated.
Thus, Government came up with this idea of increasing the export duty, which would
significantly reduce the profit margins of the exporters, thus encouraging them to sell the
products in the domestic market rather than in the foreign market. This would eventually lead to
reduce in inflation as the prices of these goods would decrease when these would be available as
a surplus in the domestic market and would therefore help in bringing the price of these goods to
its right position.

ICRA said that government’s decision to impose a 15% export duty on a range of finished steel
products accounted for almost 95% of India’s overall finished steel exports in FY21 and FY22
and would render exports significantly less attractive going forward, which in turn could exert
pressure on domestic steel prices and industry capacity utilization levels.

“In FY2022, Indian mills recorded a 25% Y-o-Y growth in finished steel exports as they took
the benefit of elevated seaborne prices. Europe, Vietnam and the Middle East were the three
largest destinations for Indian steel exports, together accounting for around 50% of India’s

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overall steel exports, including semis. We believe that many of these destinations would become
less attractive now as mills evaluate the economics of a higher duty," Jayanta Roy, Senior Vice-
President & Group Head, Corporate Sector Ratings, ICRA said.

“Additionally, with steel export offers for deliveries to Europe being higher by 10-11% over
more competitive markets like South-East Asia and the Middle East, the adverse impact of the
new export duties on steel exports to Europe would be relatively less severe than that of South-
East Asia and the Middle Eastern markets," he added.

As per the report, with domestic mills tapping export markets, finished steel exports have so far
accounted for 10-11% of India’s finished steel production in the last two fiscals. However, the
imposition of the 15% export duty would make exports significantly less attractive going
forward, which in turn could exert pressure on domestic steel prices and industry capacity
utilization levels, ICRA said.

The report said that though the increased export duty on iron ore is substantial and is
incrementally positive from the perspective of better availability of domestic iron ore, it may
not be a material shock-absorber as it affects the economics of only less than 15% of total iron
ore that was exported by domestic miners in FY2022. Over 86% of the iron ore exported by
miners in FY22 was in the below 58% Fe grade category, which anyway has limited use in
domestic steelmaking without further processing through beneficiation.
MINT PREMIUM

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