NEW DELHI: With the demand for steel continuing to increase during the pandemic, the Union government is considering a further reduction in customs duty levied on steel imports. “Metal prices in general and steel prices in particular have gone up. There is a surge in domestic demand. We have received requests from industries to slash import duty and anti dumping duty to ease up some supply. The matter is under review,” a senior government official said.
In the Union Budget for FY 2021-22, Finance Minister Nirmala Sitharaman had imposed an anti-dumping duty (ADD) and countervailing duty (CVD) on certain steel products. But customs duty was slashed to 7.5 per cent on many steel raw materials. On steel scrap, customs duty was reduced to nil. However, small scale industries are demanding that this should be brought below 3 per cent for the next 3-4 months.
Over the past few quarters, demand has increased by a significant margin resulting in a steep rise in steel prices. The consumption of steel in India in 2020 was 88.5 million tonne (MT) and according to the latest World Steel Association forecast, India’s steel demand is expected to rebound by 19.8 per cent in 2021, the highest rate among the world’s top 10 consuming nations.
Another reason for the hike in steel prices is that many steel companies are using their facilities to supply oxygen cylinders currently, given the steep rise in demand for oxygen cylinders. For instance JSW Steel is diverting 185 tonnes of oxygen daily from its Dolvi plant in Maharashtra. “We need oxygen to save lives. Oxygen is a raw material in steel plants and, at this crucial time, we are committed to prioritise saving lives over steel making,” the group had said in a tweet last month.
Even Tata Steel and other domestic manufacturers are diverting oxygen supply to hospitals creating a short term supply gap, hitting domestic units dependent on steel hard, especially in the MSME segment. The price of steel has seen a surge globally too. Domestic hot-rolled coil (HRC) prices, meanwhile, have gone up from Rs 39,200 per tonne in March 2020 to over Rs 58,000 in April, witnessing an over 50 per cent increase in the last one year.