The government has withdrawn 5-15% export cess imposed on a variety of steel products including Hot and Cold Rolled Coils, Steel Pipes and Tubes and Galvanized sheets.
It has, however, increased export cess on long steel products such as bars and rods; angles, shapes and sections and wire from present 10% to 15% to improve their availability in the domestic market.
Rising price of long products has directly impacted consumers with higher cost of construction. It is understood that 15% export cess on pig iron has also been maintained at the same level to discourage its exports and make available the material for value addition by domestic companies.
The levy of 15% ad valorem duty on iron ore is significant as it has been uniformly levied across all categories of ore irrespective of iron content. This likely to improve the government’s resources substantially as the country exports roughly 100 million tonnes of ore annually mainly to the spot markets in China where prices have been spiraling.
Removal of export tax on flat products would be a positive for the companies like JSW Steel, Essar Steel and Uttam Galva who are major exporters of flat products.
However, ad valorem duty of 15% on iron ore would be a negative for iron ore exporters like Sesa Goa. We maintain our NEUTRAL view on Steel Sector.