The government on Saturday decided to impose hefty export duties on crucial steel-making raw materials like iron ore and pellets. The export duty on all grades of iron ore has been increased 50 per cent from 30 per cent earlier.
Further, the government has imposed a 15 per cent export duty on hot-rolled, and cold-rolled steel products from nil earlier. On the import front, the government has cut import duty on some raw materials like PCI, met coal and coking coal.
Export duty on steel is likely to result in higher domestic supplies, thus exerting downward pressure on prices, said Kunal Motishaw, analyst, Securities.
Following the announcement, shares of
plunged about 14 per cent to Rs 1,007.30 during early trading hours. tanked over 13 per cent to Rs 478.90.
() also plunged 13 per cent, whereas plunged 11 per cent during the trading session. hit the lower circuit of 20 per cent at Rs 311.70.
Brokerage firm said, “We view the government’s recent notification on duties pertaining to the ferrous sector as negative. Following this, spreads will likely to reduce further; exports would be curtailed; capex plans likely to be affected as the key points.”
While these measures might be pulled back to an extent they create regulatory headwinds for the sector, it added.
CLSA has cut its estimates on the steel stocks after the ministry of finance announced export duties on steel products. “Lower coking coal and iron ore are key concerns with domestic steel prices that are likely to correct,” it added.
The global brokerage firm has downgraded three major steel counters- Tata Steel (from buy to underperform), JSW Steel (Underperform to sell) and
(from buy to underperform).
India exported 13.5 million tonnes (MT) of finished steel in FY22, compared with 10.8 MT in FY21, while domestic steel consumption stood at 106 MT during the same period, up from 94 MT in FY21. India’s iron ore exports stood at 15.3 MT in FY22, while that of iron ore pellets stood at 11 MT.
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