Nov 1, 2008

Business - India;Govt withdraws 15% export duty on steel

The government today withdrew the 15 per cent export duty on pig iron, iron and steel ingots, bars and rods, angles and sections. It also replaced the 15 per cent ad valorem export duty on iron ore fines. The export duty on scrap and iron ore lump remains unchanged.

The export duties on steel products and iron ore were imposed in May and June this year, respectively, to discourage exports and rein in the rise in domestic prices. The government, in a statement, said this was done after the steep fall in global steel and iron ore prices in order to make exports remunerative and save jobs in the sector.

Steel exporters hope these steps would bring some relief for them, though international prices are currently low and there is little incentive to export.

“We are the largest exporter of billets from the country but international prices are very low. However, this is a good message from the government,” said Neeraj Singal, managing director, Bhushan Steel.

Apart from direct exports, the move would also benefit players which send semi-finished products to their own finishing mills outside India.

Ankit Miglani, director (commercial) of Uttam Galva Steels, said the move was extremely positive because it showed that the government was concerned and was willing to help the industry. He, however, felt that while it (the decision) would not push up prices, it would help check prices from collapsing.

Since September, steel prices had slumped about 10 per cent and some of the large producers expect prices to fall further.

However, the specific duty of Rs 200 per tonne on iron ore fines versus an ad valorem duty was unlikely to benefit the steel industry. Miglani said iron ore prices had dropped so much that an ad valorem duty would probably have worked out better for the steel industry than the specific duty. Prices of iron ore fines with more than 63 per cent iron content was now available for $50 a tonne as compared with $155 this April.

R K Sharma, secretary-general of the Federation of Indian Mineral Industries, said there was no buyer for Indian iron ore and the duty should have been withdrawn. The steel industry was hoping that there would be more support from the government over the next few days. The industry was expecting an import duty of 5-10 per cent on hot rolled, cold rolled and galvanised steel products.

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