BLOG
Steel export duty: Temporary measure or long term overhang?
What's Buzzing:
Recently an export duty of 15% had been levied on steel intermediaries and on major steel products. These duty changes were effective from May 22, 2022.
Context
In order to improve availability of steel in domestic market, export duty has been levied on steel intermediaries and key steel products. Export duty of 15% (from nil earlier) has been levied on major steel products.
Our Perspective
The export duty on steel exports has been levied with a view to control inflation. A parallel can be drawn with CY08 wherein similar types of export duties were levied at that time also to tame inflation. In CY08, the duties were short lived, as they (export duties) were revoked that time partially within a month and completely within five months. Hence, industry sources indicate that the 15% export duty is more like a temporary measure and will be reversed once the high inflation falls to comfortable levels. However, no specific timelines have been given for the reversal of export duties. Steel companies have also indicated that they are looking more long term and would continue to export albeit at a moderate pace. For example, in FY22 JSW Steel’s export share in overall volumes was at 28%, which the company expects to moderate to ~15-20% levels in the current financial year FY23E. Majority of the listed large steel companies are also planning to continue their announced capex plans as domestic demand is likely to grow at a healthy pace over the medium to long term horizon.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
Related content
Blogs
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Articles - Stocks
Advantages and Disadvantages of NPS
It is a long established fact that a reader will be distracted by the readable content of a page when looking at it...
Video
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.
Video - Stocks
What is Book Value?
Book Value Explained – Find out what is book value in stocks in this video by ICICIdirect.com.