India's steel exports to decline 40% in FY23

New Delhi: India's steel exports is expected to come down by 40 per cent to 12 million tonnes (MT) in the ongoing fiscal, as a result of the duty-related measures taken by the government last month, according to CRISIL.

The export of finished steel had reached a record high of 18.3 million tonnes in the 2021-22 financial year and the prices were at their all-time high, the agency said on Monday. On May 21, the government announced waiving of customs duty on the import of some raw materials, including coking coal and ferronickel, used by the steel industry. Also, the duty on exports of iron ore was hiked by up to 50 per cent and for a few steel intermediaries to 15 per cent. "India's steel exports will drop 35-40 per cent to 10-12 million tonnes this fiscal following the 15 per cent 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," the CRISIL research analysis said.

Steel exports had reached a record high of 18.3 MT last fiscal. However, it will continue to see momentum because of the disruptions caused by the ongoing Russia-Ukraine conflict, and Russia is a key exporter of steel, coking coal and pig iron. In addition, the European Union's (EU) move to raise India's export quota – amid a widening differential between steel prices in the two geographies – benefited domestic steel makers, and limited the impact of a 25 per cent tariff on steel imports imposed by the EU, the report said.

But while steel firms enjoyed fat realisations overseas, domestic demand grew 11 per cent year-on-year, driving domestic prices to all-time highs. This led to soaring construction costs and multiple price hikes by makers of automobiles, consumer appliances and durables to pass on the increase. The hike in export duty was aimed at curbing this inflation. Hetal Gandhi, Director, CRISIL Research said "The duty-driven price correction will improve availability of steel in the domestic market as finished steel exports dwindle. This will directly impact India's export volume in the current fiscal.