Export duty under examination: Indian steel minister

A 15pc export tax on steel imposed by the Indian government in May is being considered and examined by the country's new steel minister, although no changes have been announced.

"These [export tax removal proposals] are things that I am engaging myself on currently, we will take a considered decision," India's steel minister, Jyotiraditya M Scindia, said this week in an televised interview with CNBC. He did not specify if a formal proposal has been sent to the country's ministry of finance on changes to the export duties, but said the taxes were under his "consideration and examination".

Indian state-controlled iron ore pellet producer KIOCL temporarily shut its 3.5mn t/yr pellet plant in Mangalore because of the 45pc export duty.

The government may consider reversing export duties on iron ore pellets as the duties have led to some domestic plants' shutting down, some participants said, although there was no such decision yet.

The lobbying to remove steel exports duty was strong, a pellet producer said, that may result in steel export taxes being reviewed ahead of those on pellet exports. While there were many market discussions about the removal of steel export taxes, there was a case for lifting pellet export duties because of the shutdowns, a steel producer said.

Another pellet producer has cut output by 50pc because the duty, it told Argus but did not want to be named.

The finance ministry had imposed a 15pc export tax on nine steel products effective 22 May, including pig iron, hot-rolled coil (HRC) and cold-rolled coil products. The government also imposed a 50pc tax on all grades of iron ore to increase the availability in domestic markets and to curb inflation.

As the duties near three months of being applied, Indian exports of pellets and low-grade iron ore have essentially paused, while finished steel exports plunged to a three-year low in July and turning the world's second-largest steel producer into a net importer for the first time since January 2021.

Domestic HRC prices have dropped by 17pc since the export tax was levied and have fallen by 27pc since hitting a record peak of 78,500 rupees/t in early April. Demand in the domestic market has been muted on expectations of a further fall in prices with surplus inventories at steel mills.

But steel producers have reiterated that the export duties are a temporary measure.

India's largest iron ore producer state-controlled NMDC has cut prices three times since the duties came into effect and has so far reduced prices of 10mm fines with 64pc Fe by 46pc and lump with 65.5pc Fe by 36pc. Its sales and output dipped to a near two-year low in June and July respectively.

By Deepali Sharma and Sumita Layek