𝑻𝒉𝒆 𝑮𝒐𝒗𝒆𝒓𝒏𝒎𝒆𝒏𝒕 𝒂𝒏𝒅 𝒊𝒕𝒔 𝒎𝒐𝒗𝒆 𝒐𝒇 𝒔𝒕𝒆𝒆𝒍: 𝒂𝒍𝒍 𝒂𝒃𝒐𝒖𝒕 𝒕𝒉𝒆 𝒄𝒉𝒂𝒏𝒈𝒆
A big move made by the Government has brought in a radical shift in the pricing structure of the #Steelindustry. The change is about eliminating customs duty on importing raw materials, such as coking coal and ferronickel, and increasing export duty from 30% to 50% on iron ore and concentrates; by 15% on some #steel intermediaries. Additionally, an export duty of 15% has been imposed on all finished flat steel and long steel, including hot-rolled coil, cold-rolled coil, coated products, plate, rebar, angle, section, and wire rod.
Stainless long and flat steel and pig iron also incur the same 15% export duty. Duties on pellets will hike to 45% from what was previously null.
The Government aims to lower steel prices and increase its availability in the domestic market. This action will directly impact inflation, which has been rising steadily in recent months.
𝑯𝒐𝒘 𝒘𝒊𝒍𝒍 𝒊𝒕 𝒂𝒇𝒇𝒆𝒄𝒕 𝒕𝒉𝒆 𝒎𝒂𝒔𝒔?
This move has received a dubious repercussion, coming to the bigger slice of the population. Some applauded the move, believing that it would lower local prices and make India’s steel sector more competitively prepared for the global market. On the other hand, some individuals believe that India would lose potential export opportunities when the price rises in the international market.
According to the Indian Steel Association (ISA), India has increased its steel export over the previous 2 years and can join the global supply market. However, charging export duty might send a negative signal to the steel investors, consequently casting a significant impact on the entire supply chain.
Furthermore, ISA believes that the imposition of export duties will benefit other nations in having a substantial proportion of the global market that India will be vacating with time.
𝑯𝒐𝒘 𝒘𝒊𝒍𝒍 𝒊𝒕 𝒂𝒇𝒇𝒆𝒄𝒕 𝒚𝒐𝒖𝒓 𝑷𝒐𝒓𝒕𝒇𝒐𝒍𝒊𝒐?
After the declaration, Jindal Steel & Power topped the decline in metal stocks, with its shares falling 17.4%, the lowest since January 2008.
On the BSE, #TataSteel fell the most since August 2015, closing at Rs 1,023.60. #JSW Steel’s stock fell 13.2% on the BSE, closing at 547.60, the lowest since March 2020.
Thus, as is imminent, a specific strategic Government move can unquestionably bring in a significant transition in a nation’s economy by affecting the industry under concern. Such actions are not just unpredictable but, at the same time, can prove to be fatal for your #Portfolio if it’s centralized around one specific industry. And in the long run, the only solution that can help you sustain through such volatility is a diversified #investment portfolio built upon a spectrum of industries. Share your fruits in different baskets, so that if one rots, you have other baskets to pull you through.