Stainless steel export duties will have long-term implications: Abhyuday Jindal, MD, Jindal Stainless


The imposition of a 15% export duty on steel and stainless steel will have “long-term implications” for Indian producers trying to expand their export bases, Abhyuday Jindal said, Managing Director of Jindal Stainless Ltd – the largest stainless steel manufacturer in the country. maker.

According to him, the duty will impact the viability of dedicated Indian investments and the ongoing obligations of Export Promoting Capital Goods (EPCG) of domestic producers.

In an interview at Activity area, he talks about the impact of duty; Chinese and Indonesian dumping problem; and supply chain pressures as a result of the Ukraine-Russia conflict. Excerpts:

How do steel and stainless steel export duties affect you?

The 15 per cent duty will have long term implications for domestic producers.

Previously, a majority of Indian producers had stepped up their efforts to improve export bases with government support. However, the inability to continue supply could lead this clientele (overseas) to opt for China and Indonesia.

A large part of Jindal Stainless’ exports are specialized products and finishes for various high-end applications such as oil and gas, pharmaceutical, nuclear, petrochemical, etc. These cannot be diverted to the domestic market due to a lack of adequate demand.

The export duties will also impact the viability of dedicated Indian investments, existing foreign investments that depend on raw materials from India and pending EPCG obligations (domestic producers).

And this is an additional problem compared to the cheaper Chinese imports that are imported?

India is vulnerable to dumping and imports of finished stainless steel products. Domestic industry capacity utilization is at 60 percent due to Chinese dumped, subsidized and non-WTO compliant imports and Chinese-funded investment in Indonesia.

Most of the underutilized capacity is concentrated in the fragmented MSME sector, which contributes almost a third or 14 lakh tonnes of the total stainless steel flat products capacity of around 50 lakh tonnes.

In FY22, imports from China and Indonesia increased 178% over last year. In addition, the ratio of imports in domestic consumption increased to 25%

China’s share of imports rose from 30% to 41% and Indonesia’s to 27% from 12%. Major imports from China are also below scrap prices.

For Indian producers, these subsidized and imported Chinese and Indonesian stainless steel products lead to lower price levels domestically.

At Jindal Stainless, we are strengthening our portfolio of value-added niche products and working to develop an indigenous ecosystem, while responding to new opportunities in all applications.

What was the impact of the war between Ukraine and Russia on stainless steel prices?

The war disrupted global supply chains to Russia and caused a two-sided problem for Indian stainless steel producers. We may not be able to divert our Russian exports, worth $200 million a year, to markets like the US and EU due to trade defense measures; and second, two Western countries will now also have excess quantities that will be diverted to an unprotected Indian market. This will come on top of the Chinese and Indonesian imports we talked about earlier.

For raw materials, our dependence on Russia is very low. We (Jindal Stainless) mainly buy nickel from scrap metal and nickel pig iron. These come mainly from India, Southeast Asian countries such as Indonesia and some from Europe. Additionally, we have a diverse product portfolio comprising various stainless steel series ranging from high nickel to low or nickel free products.

So what is the outlook for commodities now?

Since mid-2020, commodity prices have steadily increased due to the economic recovery from the second wave of the pandemic. This was triggered due to the Russian-Ukrainian conflict.

As a result, over the past few weeks most metal prices have fallen on the London Metal Exchange and elsewhere. This can be attributed to another wave of rising coronavirus cases in China and the Fed’s rate hike. Scrap metal prices are not directly linked to pure metal indices.

Even though the profitability of most commodity-based industries has seen some improvement, it is still well below that of carbon steel players. Additionally, stainless steel operates at relatively lower margins, and any drop in the price of raw materials has a negative impact on inventory valuation. (Raw material accounts for 70% of the manufacturing cost of stainless steel.)

O What is the outlook for FY23?

In calendar year 2021, global production of stainless steel casting increased by 11% and consumption by 13% (year-on-year). India was the second largest consumer of stainless steel with 3.71 million tonnes per annum (MTPA) – flat and long products – in FY22 and is expected to register a CAGR of 6.5 to 7, 5% and reach 4.6 to 4.8 tonnes in FY22-25.


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