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Ratings agency Icra has said that steel industry has been hit by a moving train as government cracks the whip and imposes export duty to reign in elevated prices. Almost 95 per cent of India's finished steel export basket has been hit with 15 per cent export duties. It noted domestic steel prices could potentially correct by 10-15 per cent in the coming months as demand enters the seasonally weak monsoon quarter.

Further, it said expansion plans of many steelmakers could also be impacted if the duties are maintained in the medium term.  Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, Icra, said in FY22, Indian mills recorded a 25 per cent year-on-year growth in finished steel exports as they took the benefit of elevated seaborne prices. Europe, Vietnam and the Middle East were the three largest destinations for Indian steel exports, together accounting for around 50 per cent of India's overall steel exports.

He added ‘We believe that many of these destinations would become less attractive now as mills evaluate the economics of a higher duty. Additionally, with steel export offers for deliveries to Europe being higher by 10-11% over more competitive markets like South-East Asia and the Middle East, the adverse impact of the new export duties on steel exports to Europe would be relatively less severe than that of South-East Asia and the Middle Eastern markets.’ The government hiked the duty on exports of iron ore by up to 50 per cent and a few steel intermediaries to 15 per cent. It also announced waiving of customs duty on the import of some raw materials, including coking coal and ferronickel, used by the steel industry.