India: Steel prices may decline due to higher iron ore export taxes

Relevant media reported on January 3: India has increased the iron ore export tax from 20% to 30% to help the domestic steel industry. The country's steel industry is currently experiencing a raw material shortage.

RK Sharma, secretary-general of the Indian Mining Federation, stated that the Indian Ministry of Commerce’s decision was a huge blow to the country’s mining industry because the increase in export taxes meant the end of exports. Business Standards reported that when the export tax for iron ore was 20%, India’s mining exports fell by 28% in the first eight months of fiscal 2012.

At present, the steel production sector in India is facing a predicament mainly due to the severe shortage of raw materials for iron ore. This is mainly due to the ban on mining in the Beralari region of Karnataka due to illegal mining. The increase in export taxes on iron ore is expected to increase the supply of iron ore to domestic steel companies. Steel companies may obtain iron ore at cheaper prices, which will ultimately reduce the cost of steel production.