Explained: Why Tata Steel, JSW, SAIL & other metal stocks crashed today – Times of India

NEW DELHI: The decision to hike export duty on iron ore and few steel intermediaries has dampened spirits of local manufacturers.
On one hand the Centre is taking all efforts to tame the soaring inflation in the country, while on the other top mining and steel groups are warning of adverse impact.
As a result, the metal index took a harsh beating at the bourses on Monday.
Jindal Steel & Power was the biggest loser as the stock crashed 17.5 per cent on the NSE, while it finished 17.4 per cent lower at Rs 396 on the BSE.
While, steel and iron ore groups including Tata Steel and JSW Steel slid at their steepest pace since early 2020.
Top steelmaker Tata Steel fell 12.32 per cent and JSW Steel plunged 13.21 per cent. Besides, Jindal Stainless cracked over 15 per cent on the BSE and NSE. State-run SAIL tumbled as much as 10.42 per cent on the NSE, while it closed 10.96 per cent lower at Rs 74 on the BSE.
The iron ore industry was also hit hard by the move to boost export taxes.
Shares of state-run NMDC fell 12.44 per cent to close at Rs 128 on the BSE, while it finished 11.74 per cent on the NSE. Top mining conglomerate Vedanta slid as much as 7 per cent during the day but recovered some bit to finally end 2.67 per cent lower on the NSE.
Why stocks crashed today
The heavy sell-off in metal stocks was witnessed on Monday after the Centre imposed an export tax of 15 per cent on eight steel products.
It also waived customs duty on import of some raw materials, including coking coal and ferronickel. Both are used by the steel industry as a major input.
The announcement came at a time when steelmakers were looking to make up for tepid local demand by increasing market share in Europe, whose supplies have been hit by Russia’s invasion of Ukraine.
The import duty on ferronickel, coking coal, PCI coal has been cut from 2.5 per cent, while the duty on coke and semi-coke has been slashed from 5 per cent to ‘nil’.
The tax on the export of iron ores and concentrates has been hiked to 50 per cent, from 30 per cent, while that on iron pellets a 45 per cent duty has been imposed.
Finance minister Nirmala Sitharaman said the customs duty changes in raw materials and intermediaries for iron and steel will “reduce their prices”.
Why were export duties hiked
Inflation has become a major headache for the government.
Wholesale and consumer prices accelerated in April at their fastest in years, prompting the central bank to hike interest rates at an unscheduled policy meeting this month, with another likely in June.
Commodity prices have been surging globally ever since Russia’s invasion of Ukraine in February. It hampered key supply chain routes, especially at a time when economies were trying to recover from the past 2 years’ slump caused by Covid-19.
Steelmakers warn of adverse impact
Indian Steel Association warned that the new export duty on steel products will “adversely impact” mills that have been aiming to boost exports and widen global market share following Russia’s invasion of Ukraine.
The world’s second-largest crude steel producer churned out a record 120 million tonnes in the fiscal year that ended in March.
“The latest policy will dampen fresh investments,” Dilip Oommen, chief executive officer of ArcelorMittal Nippon Steel India Ltd (AM/NS India) and president of the Indian Steel Association, told Reuters.
AM/NS India – a joint venture between ArcelorMittal and Nippon Steel – believes that the decision to raise the steel export tax would hit the company’s 90,000 tonnes of steel exports every month, Oommen said.
Separately, Kaustubh Chaubal, vice-president of corporate finance group, Moody’s Investors Service, said the export duty increase would raise costs for domestic steel mills.
(With inputs from agencies)


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