Export Tax to Hurt Local Steelmakers' Margins
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Update time : 2022-06-06 21:36:17
The domestic steelmakers in India stare at significant margin squeeze, as prices recorded sharp decline following imposition of export levy on steel products by the government.
With the onset of monsoon season, the sector is likely to pass through a seasonally weak phase The export levy has led to further acceleration to the decline in steel prices, which had been on a declining trend ever since the peak in April this year. Over the past two weeks, the prices of hot-rolled coil and cold-rolled steel have declined by almost 8%. Meantime, the demand for steel in the country has been on a steady decline since September last year, except in January and April, which recorded marginal growth.
The primary reasons for the faltering steel demand were the disruptions on account of third wave of the pandemic, risks posed by costlier commodities due to Russia-Ukraine conflict and the muted automobile sales during the past one-year period. Also, slowdown in economic recovery led to stalled infrastructure and construction projects, thus leading to reduced steel demand.
The domestic steelmakers may be faced with sharp correction in margin during the initial half of FY23.
Analysts expect steel consumption growth to fall to 4% in FY23.
