The government on Saturday decided to impose heavy export duties on important steel raw materials such as iron ore and pellets. Export duty on all grades of iron ore has been increased from 30 per cent to 50 per cent.
In addition, the government has imposed zero to 15 per cent export duty on hot-rolled and cold-rolled steel products. In the case of imports, the government has reduced import duty on some raw materials like PCI, met coal and coking coal.
Kunal Matisha, an analyst at Securities, said higher domestic tariffs on export tariffs on steel could put downward pressure on prices.
After the announcement, the shares
At the opening trading hour, it was down about 14 percent at Rs 1,007.30. 478.90, down more than 13 per cent. () Also dipped 13 percent, down 11 percent during trading sessions. 311.70 at 20 per cent hit the lower circuit.
The brokerage firm said: “We view the recent announcement by the government regarding tariffs in the iron ore sector as negative. After that, the spread may decrease further; exports will decline; as a key point the Capex plan may be affected.”
Although these measures can be reversed to an extent that creates regulatory headwinds for the sector, it added.
The CLSA has lowered its estimates on steel reserves after the finance ministry announced export tariffs on steel products. “Lower coking coal and iron ore are the main concerns with domestic steel prices that are likely to be corrected,” it added.
The global brokerage firm has downgraded three major steel counters – Tata Steel (less performing) and JSW Steel (less than selling) and
(Less performed than purchased)
India exported 13.5 million tonnes (MT) of finished steel in FY22, compared to 10.8 MT in FY21, while domestic steel consumption stood at 106 MT at the same time, rising to 94 MT in FY21. India’s iron ore exports in FY22 were 15.3 metric tons, compared to 11 metric tons in iron ore gram.