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Domestic steel industry hit by moving train post govt's duty measures: ICRA

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The domestic steel sector has been "hit by a moving train," ratings agency Icra said reacting to the duty-related measures taken by the government.
Domestic steel industry hit by moving train post govt's duty measures: ICRA
On Saturday, the government hiked the duty on exports of iron ore by up to 50 per cent and a few steel intermediaries to 15 per cent. It also announced waiving of customs duty on the import of some raw materials, including coking coal and ferronickel, used by the steel industry.

In a statement on Monday, Icra said the steel industry has been "hit by a moving train as government cracks the whip and imposes export duty to reign in elevated prices. Almost 95 per cent of India's finished steel export basket has been hit with 15 per cent export duties."

Domestic steel prices could potentially correct by 10-15 per cent in the coming months as demand enters the seasonally weak monsoon quarter, it noted.

Icra further said expansion plans of many steelmakers could also be impacted if the duties are maintained in the medium term

Europe, Vietnam and the Middle East were the three largest destinations for Indian steel exports, together accounting for around 50 per cent of India's overall steel exports.

"We believe that many of these destinations would become less attractive now as mills evaluate the economics of a higher duty. 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.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


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