The notification, which happened over the weekend, caught the industry by surprise. According to the notification, export duty on hot rolled was 15 per cent, cold rolled 10 per cent, galvanised five per cent and TMT bars 15 per cent.
"If the government decides to go ahead with the notification then the industry can review its price rollback, which it undertook to help the government rein in inflation," indicated some steel producers.
Even though the rollback was not conditional, the government had assured that it would not notify the export duty. Industry sources said, combined with the export duty, if NMDC and KIOCL increased prices from April 1, then the steel companies without captive mines would not be able to absorb the cost.
"We will have to review the pricing strategy. We will wait for the steel ministry to take up the matter and then take a call," said sources.
One of the options could be to take a hit on exports and reverse the rollback in prices announced recently. Primary steel producers met the prime minister on May 7 and then committed to reduce prices of steel products and hold them for the next three months.
Spot prices of flat products were reduced by Rs 4,000 per tonne and in addition prices of rebars and structurals were reduced by Rs 2,000 per tonne.
At the meeting, the producers also laid out a charter of demands, which included the matter of export duty.
The industry urged the government not to notify the export duty. Other demands were an ad-valorem duty of 15-20 per cent, FOB on export of iron ore and that NMDC should roll back increase of about 47 per cent in prices of iron ore made effective from October 1, 2007 and should maintain the same prices post-April 2008.
The government-industry spat over prices had been going since January when the steel producers
raised prices in the wake of surge in raw material and freight costs.
The industry has been facing a cost increase of Rs 8,000-14,000 per tonne over the past one year on account of a steep surge in raw material and freight costs.
However, at the behest of the government, the industry had rolled back prices three times since January.
