The country’s steel export in the April-July period of the current year dipped about 25 per cent to 2.75 million tonnes due to the export duty imposed by the government in May.

However, import during the same period has jumped over 20 per cent to 3.5 million tonnes. Accordingly, this has helped in increasing the domestic steel supplies by nearly 1.5 million tonnes.

BENDING DOWN
Finished steel production in Q1 (April-June)
Period In '000 tonnes % growth
2000-01 7,508 12.18
2001-02 7,430 -1.04
2002-03 7,916 6.54
2003-04 8,430 6.49
2004-05 9,387 11.35
2005-06 10,159 8.22
2006-07 11,599 14.17
2007-08 12,226 5.41
2008-09 12,777 4.51
Finished (carbon) steel production grew by 4.51 per cent during
the first quarter of 2008-09 to touch 12.7 million tonnes.
Finished steel has a weightage of 5.13 per cent in the index of industrial production
Source: Ministry of Steel/PTI

“The improved domestic availability owing to a dip in export is a positive development and it has helped the consumer industries,” said steel secretary P K Rastogi. Steel export stood at 5 million tonnes in 2007-08 while import was 6.9 million tonnes. For the first time in 2007-08, the country became a net importer of the commodity as demand outstripped supply.

On May 10, the Government had notified export duty on steel and steel products ranging from 5 per cent to 15 per cent. About a month later, it decided to withdraw the duty on flat products while raising the duty on long products such as bars, rods and angles from 10 to 15 per cent. Earlier this year, it had brought down the import duty on steel from 5 per cent to nil.

“Steel companies had decided to control export on government’s request so that domestic availability is augmented. This is having a positive impact on the domestic consumption though we have lost the opportunity to take advantage of better price realisation internationally,” said Jayant Acharya, president (sales and marketing), JSW, country’s third biggest steel producer and a major exporter.

The export duty was imposed to boost domestic availability and check prices. Steel along with iron has a weight of 3.64 per cent in the wholesale price index (WPI) and has been a major contributor in driving inflation to double digits. The WPI-based inflation for the week ended August 9 stood at a 16-year high of 12.63 per cent.

Flat steel product prices had jumped 17 to 24 per cent since April 2007 while long products like bars and rounds have appreciated 50 to 60 per cent over the same period. In May, the government persuaded steel producers to hold prices for a three-month period. Companies, however, have continued the freeze even beyond this period to help government fight inflation.

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