Significant export duty (5%), high distance based charges (DBC) and increased cost of production have made pellet exports from India unviable.
Domestic pellet makers are struggling with high cost of production and subdued demand. 5% export duty on pellets, high distance based charges and preference to lump have worsened the situation for the Indian pellet industry.
Looking at the situation, N D Rao, President, Pellet Manufacturers Association of India (PMAI) said, “The Government of India needs to fine-tune its policies for exports by removing export duty and reducing railway freight for pellet transport.”
PMAI had earlier moved the Finance Ministry to remove the 5% export duty and instead, levy least 15% import duty on iron ore lumps.
Demand for Indian pellets have weakened after lump prices in domestic market witnessed significant fall, which have forced the pellet plants to operate at lower capacity utilizations. Further, decline in iron ore prices in global market and falling pellet premium have rendered Indian pellets uncompetitive in global market.
Essar Steel has remained a single major pellet exporter
Current scenario favours only the shore based pellet plants for exports. Distance Based Charges (DBC) for pellet exports are still quite high, owing to which, other domestic pellet makers are finding it difficult to opt for export.
Essar Steel has remained the country’s single major pellet exporter and has exported 0.62 MnT pellets last fiscal and 0.61 MnT in FY16 (till 26 Sept’15). KIOCL is also set to export pellets to Iran. Iran has emerged as a potential pellet export market for India owing to logistics advantages.
till 26 Sept’15
Provisional data
Source: SteelMint Research, Customs
-Sourced
Leave a Reply