Government may also roll back steel export duty.
With global steel prices on the decline, the government is likely to revisit the export and import duties on steel. While an import duty of ten per cent is expected to be imposed in order to protect domestic steel companies, the government is likely to roll back the export duty on certain steel products to help producers draw down their mounting inventories.
“The steel ministry has recommended the rollback. The notification is likely within seven days,” said a government official.
The proposal to impose import duty on steel products has been mooted because the landed price of imported steel is 10 to 15 per cent lower than that of domestic producers. “A final decision will be taken soon,” official sources added. The five per cent import duty on steel was removed earlier this year to cool the price of the metal.
Industry executives told Business Standard that large quantities of steel were contracted abroad during September-October at prices significantly lower than domestic prices. The situation is likely to worsen with the arrival of these shipments over the next three months.
Since September, steel prices have slumped about 10 per cent and large producers like Tata Steel expect prices to fall another 10 per cent in the current quarter.
On May 10, the government had notified export duty on steel and steel products ranging from 5 per cent to 15 per cent. About a month later, it decided to withdraw the duty on flat products, while raising it on long products such as bars, rods and angles from 10 to 15 per cent.
As a result, exports have seen a decline during the April-September period, while imports have risen sharply. Companies like JSW Steel had decided to cut down export contracts to help the domestic user industries. However, domestic consumption too has slowed down now.
“Owing to the slowdown in consumption, the inventory levels of all steel producers have increased. There is pressure on capacity utlilisation and prices are under tremendous pressure,” said an industry executive. Tata Steel recently said the demand from makers of trucks and buses has fallen, while supplies to cars and other light vehicles have remained flat.
“The industry is pushing for a floor price of $800 a tonne on steel import, since a number of international suppliers are ready to sell for as low as $600-700 a tonne, which does not even cover our cost of production,” the executive added.
