How will the recent duty changes in steel impact the industry?

It was a double whammy for the steel sector over the weekend. The combination of lower input costs and higher export duties on steel are expected to have a twin effect. It makes the input cost for steel lower and it also makes more steel available domestically by curbing exports via higher export duties. This combined effect is expected to bring down the price of steel by 10-15%, as per estimates put out by the EEPC.

Not surprisingly, the steel companies were unhappy with the export duties as it could lead to cancellation of orders from EU. Tata Steel and JSW Steel corrected more than 12% in a single day due to this factor. Indian steel companies, reeling under onslaught of higher coking coal prices, will gain from exemption in duties. In addition, lower excise on petrol and diesel will bring down freight costs for steel. TMT bars are already trading 10% lower.