China may benefit from hike in Indian export duty on steel products

In the three months ended March, India’s steel exports stood at 3.9 MT, as against 4.8 MT in the June quarter last year.

Domestic steel producers saw exports decline by about 1 MT in the first quarter as compared to the previous quarter, while Chinese exports rose by 7.1 MT to 20.3 MT. Sugar exports were also higher as compared to 19.7MT a year ago.

While sluggish demand in the Chinese market may have helped Beijing boost exports, the industry said the fall in Indian steel exports contributed to a rise in Chinese exports from 5 MT in March-April to 7.5-7.8 MT in the June quarter. may have been given. expert. China could also benefit from reduced steel exports from Russia and Ukraine.

Rising exports supported China’s steel production, even as domestic demand remained sluggish following an economic slowdown and a real estate crisis amid the Covid-induced lockdown.

Chinese steel production increased from 246 MT in the three months ended March to 280 MT in Q1FY23. In comparison, India’s steel production fell by 1 metric tonne to 31 metric tonne. As exports were not supportive and prices were falling, destocking in the markets prompted Indian companies to reduce production.

Indian steelmakers also reported lower sales volumes in the June quarter. According to Tata Steel’s investor presentation, steel consumption declined 4% sequentially. It said export volumes declined by 40% due to export duty and reduction in foreign demand.

Tata Steel’s India sales volume fell to 4.07 MT in the June quarter, from 5.12 MT in the March quarter and 4.15 MT a year ago. The company said deliveries were 2% lower than a year ago due to moderation in exports after levying 15% duty.

Joint managing director and group chief financial officer Seshagiri Rao MVS said sales of JSW Steel declined 21% sequentially. Steel prices in India have fallen by more than 20%, while duty hikes are taking away the gains that India could have taken advantage of for export opportunities, he said.

Jindal Steel & Power Ltd has also been hit by export duty, with its sales volume falling 16% sequentially to 1.74MT in the quarter. The contribution of exports was 26% in the first quarter of FY 2012, as compared to 29% in the fourth quarter of FY 2012. However, analysts said the aim of the government to impose export duty is to control the rise in domestic steel prices and it may be removed soon.

The Russian-Ukraine crisis led to an increase in steel prices in both India and international markets in February-March. Prices in India remained high till May before the imposition of export duty.

International steel prices continue to fall amid fears of a global slowdown and slowdown.

Industry leaders and experts said the developments are likely to prompt the government to remove export duty soon.

Tata Steel Chief Executive and Managing Director TV Narendran said the growth in Chinese steel exports in May-June was temporary.

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