India’s steel exports is expected to fall by 40% to 12 million tonnes (mt) this fiscal, owing to duty related measures taken by the government last month, “Steel exports will drop 35-40% to 10-12 mt this fiscal following the 15% export duty imposed on several finished steel products last month. Exports of iron ore and pellets will also fall this fiscal, and lower domestic prices” said, ratings agency Crisil.
“The duty driven price correction will improve availability of steel in the domestic market. This will directly impact the export volume in the current fiscal. Steelmakers will attempt to skirt the duties by bumping up exports of alloyed steel and billets, but that is unlikely to compensate for the loss of finished steel exports” said, Hetal Gandhi, Director, Crisil Research.
The agency further said the both export volume of iron ore and pellets is expected to see a massive drop from 26 mt last fiscal to 8-10 mt in the current one, and bring about a sharp correction in domestic prices.
Steel prices (ex-factory), which averaged ₹77,000 per tonne in April, had already cooled off by ₹4,000-5,000 per tonne in early May in line with global prices. The duty imposition has driven prices down further, as current prices stand close to ₹14,000-15,000 per tonne lower than the April peak.
“Correction in steel prices was already on the cards as global prices started correcting As of mid June, prices are already at ₹62,000-64,000 per tonne and can be expected to trend below ₹60,000 per tonne by the end of the fiscal” said, Koustav Mazumdar, Associate Director, Crisil Research.