In a step to boost Indian pellet exports, Indian govt. has reduced pellet export duty from 5% to nil via customs notification dated 04 Jan’16.
Indian pellet industry which has been struggling with high pellet export duty and high distance based charges have been demanding for removal in pellet export duty since quite a long time. Indian govt. via issued notification yesterday (04 Jan’16) has completely removed export duty on pellets.
Pellet exports from India have dropped considerably from 248,000 MT in Q2 FY16 to nil in Q3 FY16. Earlier in Dec’15, Pellet Manufacturers Association of India (PMAI) had requested the central govt. for removal of 5% export duty looking at the un viability of the pellet exports from India. The central govt. had imposed pellet export duty of 5% on 27 Jan’14.
Taking today’s scenario into consideration, pellet exports are comparatively viable to the shore based plants namely KIOCL and Essar Steel than others. Fall in global prices and high freight charges have lessened the viability of pellet exports from non-shore based plants.
In conversation with SteelMint, Mr. Deepak Bhatnagar Secretary General of Pellet Manufacturers Association of India (PMAI) shared, “ In the current scenario Indian pellet industry is struggling with high cost of inputs. Out of the total capacity of 85 MnT pa, nearly 80% of the pellet makers have shut their plants. Elimination of pellet export duty will be comparatively beneficial more to the shore based plants than others.”
Currently, Brazillian (Fe 66%) pellets are at USD 63.6/MT, CFR China. Also, the spot pellet premium has weakened to USD 10.6/dry MT unit CFR China. While on the other hand domestic pellet (Fe 63%) prices in Barbil are at INR 3,200-3,300/MT (loaded to wagons).
Thus, reduction of export duty might bring out a benefit of INR 150-250/MT in pellet exports. at such low global prices it will be viable only to the shore based plants to export pellets.
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