Centre mulls export ban on flat steel products, iron ore to check prices

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Steel industry may be in for another shock with the Centre now considering banning exports of flat steel products with a view to check rising inflation.

“If the prices of flat steel products are not being kept in check, either the export duty can be increased or a ban on exports can be considered to increase domestic availability,” committee of secretaries (CoS) observed in its last meeting. It also noted that the government may consider increasing export duty on long steel products and subsequently explore the possibility of banning iron ore exports to increase domestic availability. Steel prices have since January this year shot up by around 50%, adding to the double-digit inflation, which is hovering at a 13-year high of just below 12%.

The government had on June 13 exempted flat rolled products of iron and steel, including galvanised products, pipes and tubes that attracted export duty ranging from 5 to 15% ad-valorem, from the purview of the export duty.

The rate of export duty on long products such as bars and rods, angles, shapes, sections and wires was also increased from 10 to 15% and a 15% ad-valorem duty was imposed on iron ore.

The CoS decided that the ministry of steel in consultation with department of revenue will soon consider suitable measures for increasing the domestic availability of steel and moderating its prices. The ministry will also consider proposals for implementation in early August when the three-month self-moratorium imposed by major steel producers to hold their priceline expires.The ministry will quickly undertake an analysis on the options available for moderating the prices of iron ore and submit it for consideration of the company of secretaries during the next meeting, they added. Till February, domestic prices of steel products were higher than the Freight on Board (FOB) export prices. While in January the domestic ex-factory price of bars were $694 per tonne and the FOB export price was $600 per tonne. After various fiscal measures announced by the government in April-May, domestic prices declined although FOB prices have been continuously increasing. In June, domestic prices were $779 per tonne compared to FOB price of $1,280 per tonne.