Analysts view on withdrawal of export duty

According to domestic brokerage ICICI Securities, the withdrawal of export duty augurs well for domestic steel players, but over a longer term horizon. “Global steel demand has turned subdued since May 2022, which has put downward pressure on steel prices. As steel prices in the global market are currently muted, hence export volumes are likely to pick up notably only when international prices recover. However, the recent step of removal of export duty on steel products does provide an opportunity for domestic players to enhance their export volume notably as and when global steel prices strengthens,” the report noted.

“Even though current domestic HRC prices are at a premium to landed cost of imports, the recent relief measure is likely to aid in keeping domestic steel prices stable around current levels in the near term. While we do not expect a major uptick in domestic steel prices, we believe a significant sector headwind has been removed,” it added.

The agency, in its report, said that the export market is more favourable for stainless steel players such as Jindal Stainless (JSL) & Jindal Stainless (Hisar) (JSHL) as compared to carbon steel players as European players have curtailed production due to the ongoing energy crisis.

"We believe the roll back of export duty is unlikely to have a significant impact on steel realisations given India export price is at a steep discount to domestic HRC price. Export volumes are expected to pick up given low base – exports for October have declined 66 per cent YoY while year-to-date exports have declined 55 per cent. A 20% increase in finished steel inventory from March-September will likely result in higher exports, as steel companies start chasing global markets. Improved competitiveness of India against Asian countries post rollback of export duty," JM Financial said in its report.

Export duty on steel

Govt scraps export duty; here’s how steel stocks reacted