According to the Indian rating agency ICRA, the introduction of a 15% export duty covering more than 95% of national finished steel exports in India from 22 May could lead to a significant reduction in foreign supplies.
He estimates that exports of finished steel products could fall from 13.5 Mt in FY2021/2022 (April/March) to about 10 Mt in 22/2023. This decline will affect shipments to competitive markets of Southeast Asia and the Middle East most, and to a lesser extent the premium European destination.
At the same time, Indian companies can increase overseas sales of non-taxable semi-finished products. They shipped 4.9 million tons of billet and slab abroad in FY2021/2022. According to ICRA analysts, their exports could increase by 40% this year to over 6.8 million tons.
After the introduction of the tariffs, the prices of steel products in India fell. Now, according to ICRA, the cost of domestic hot rolled steel is $100-120 per tonne less than the cost of imported products from China. However, the agency believes that the decline in national steel imports will be no more than 10% compared to 4.7 million tons last year.
Some large Indian companies, which have accumulated surplus steel product stocks due to falling exports, say they may cut production and shut some plants out of service. However, ICRA hopes that the expected 7-8% increase in steel consumption in the country in the current financial year will help reduce losses from reduced export deliveries.
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