S&P Global Commodity Insights: Indian steel fraternity livid over unexpected, steep export tariffs

Press Release

25-05-2022

India's sudden and unexpected revision of export duties on steel products is likely to result in short-term uncertainty and long-term structural ramifications on global steel markets, sources told S&P Global Commodity Insights May 23.
Market participants, however, noted that boron-added hot-rolled coil, HS Code 7225, could still be exported, even though the official notification has yet to be published on the gazette. According to sources, this could have been either deliberate on the part of the government or was missed out given that boron-added HRC has not been exported recently.
Platts assessed domestic HRC delivered Mumbai at Rupees 69,000/mt at the Asian close May 20, 76.9% higher from Rupees 39,000/mt ($502) on Feb. 5, 2020, data by S&P Global showed. In contrast, Platts had assessed Chinese HRC ex-stock Shanghai 34.8% higher from Yuan 3,590/mt on Feb. 5, 2020 to Yuan 4,840/mt on May 20. With this revision, market sources unanimously expect domestic prices to fall substantially.
Prior to the export duty hike, India's steel exports sank 21.9% year on year and 37.8% month on month to 0.74 million mt in April as global demand fell. With domestic demand still sluggish since April, and likely to stay muted until the end of the monsoon season in September, a glut in the domestic market is probable, pushing prices down strongly. Platts assessed IS1786 Fe500D/Fe550D 12-25 mm diameter rebar delivered to Raipur at Rupees 57,900/mt on May 20, falling 7.65% from Rupee 62,700/mt on April 1, data by S&P Global showed, highlighting the market weakness.
“The staggeringly high export duty levy on steel seem to have been taken with a purpose to tame rising inflation, make government infrastructure projects viable and support the MSME industries, who have been unduly hit by the high domestic prices ever since the pandemic stuck in 2020. We would likely see Indian Steel export volumes plunging, except for few niche destinations like EU, till the time the duties remain at play, even as domestic demand will prop up. Perhaps a few mills may like to cut production in the short-term to support prices,” said Ashima Tyagi, Senior Editor, Indian & Asian Steel Markets, S&P Global Commodity Insights.

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