After an overnight decision to
levy export levies on steel products, Indian steel manufacturers may be
compelled to cancel European orders and suffer losses. Late Saturday, V R
Sharma, managing director of Jindal Steel and Power India, levied a 15% export
tariff on eight steel products, at a time when steelmakers are aiming to
increase market share in Europe, where supplies have been disrupted by Russia’s
invasion of Ukraine. In an interview, Sharma said, “They should have given us
at least 2-3 months, we didn’t know about such a major policy.”
The decision could raise industry costs by as much as $300
million, he said. “We alone have 260,000 tonnes of orders, which were taken
when export duty was zero,” Sharma said. JSPL, India’s
fifth-largest crude steel producer which competes with Tata
Steel, JSW Steel, SAIL, and ArcelorMittal Nippon
Steel India, was targeting to boost its exports to up to 40% of sales,
mostly to Europe.
Sharma said Indian steelmakers have about 2 million tonnes in pending
export orders, mostly to Europe, which are stuck in ports or various
stages of production. “This could lead to force majeures. And the customer has
done no wrong here and he doesn’t deserve to be treated that way,” he said.
Russia and Ukraine exported 46.7 million tonnes in 2020, mostly to
the European Union, the world’s second-biggest importer of steel,
according to the World Steel Association.
The export taxes on steel were part of a series of changes to
taxes on crucial commodities aimed at reining in retail inflation, which has
hit eight-year highs. Removal of import duties on coking coal, PCI coal, and
anthracite and imposing an export tax on iron ore, all key raw materials used
in steelmaking, might not be enough to soften the blow to exports, Sharma
said. “Coking coal prices are still very high,” he said, adding that the export
tax would benefit local carmakers and other heavy engineering industries.