Cut in Import Duty to Reduce Steel Prices by 10%: ICRA

SEATTLE (Scrap Monster): ICRA- the ratings agency stated that the government’s proposal to cut duty on imports of steel products into the country in the latest budget could heighten competition in local market. The domestic steelmakers in the country are likely to near-term pricing pressure, with domestic prices expected to decline by at least 10%.

Meantime, ICRA noted that domestic steel demand in the country is likely to remain healthy in the forthcoming months, especially due to the newly announced infrastructure push and other positive announcements. This in turn will provide support to domestic steel prices unless the international prices undergo significant correction from the current levels, ICRA added.

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According to the ratings agency, the duty cut is unlikely to impact imports from countries like South Korea and Japan, with whom the country has a Free Trade Agreement (FTA). On the contrary, imports from other destinations including China would turn out to be more cost-competitive. For instance, the weak domestic demand has resulted in 10% dip in Chinese export HRC prices during the month of January this year.

The government, in its Budget 2020-’21 had reduced customs duty on flat steel products from 12.5% to 7.5% and that of long steel products from 10% to 7.5%.