Indian steel firms could be forced to cancel European orders and suffer losses after an overnight decision to impose export taxes on steel products, V R Sharma, managing director at Jindal Steel and Power told Reuters.
India imposed an export tax of 15% on eight steel products late on Saturday, at a time steelmakers are looking to make up for tepid local demand by increasing market share in Europe, whose supplies have been hit by Russia’s invasion of Ukraine.
“They should have given us at least 2-3 months of time, we did not know about such a substantial policy,” Sharma told Reuters in an interview.
Sharma said Indian steelmakers have about 2 million tonnes in pending export orders, mostly to Europe, which are stuck in ports or in various stages of production.
“This could possibly 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 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.
The export taxes on steel where 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 others heavy engineering industries.
(By Sudarshan Varadhan and Aftab Ahmed; Editing by Jason Neely)