Steelmakers Anticipate Notable Dip in Export Business

SEATTLE (Scrap Monster): The Indian government’s decision to levy 15% export tax on eight steel products is feared to impact the profitability of leading steelmakers, who mainly depend on export market. It must be noted that the government measures are aimed at putting breaks on rising commodity prices.

The steelmakers likely to be impacted the most include Tata Steel, Steel Authority of India Limited (SAIL), Jindal Steel and Power Limited (JSPL) and JSW Steel.

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The country’s total steel exports had surged higher by 74% during the two-year period from FY20 to FY22 to 20.5 million tonnes. The boosted demand from export market lifted the capacity utilization of the steel industry from 79% in FY20 to 83% in FY22. The Indian steelmakers have been the major beneficiaries of lower exports from China and reduced output from European countries due to higher energy prices.

Among Indian steelmakers, JSPL has the highest export share of 35%, followed by JSW Steel and Tata Steel with 31% and 14% respectively.

According to trade analysts, the duty will result in 50% reduction in exports by leading steelmakers. As a result, there will be increased steel supply in the domestic market, which in turn will result in significant reduction in domestic prices. Ashish Kejriwal, research analyst at Centrum foresees reduction of up to INR 5,000 per tonne in domestic steel prices.