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Without warning, India implemented a 15% export tariff, effective Sunday, May 22, on HRC and CRC steel. One large domestic producer, alarmed by the government’s sudden move, told Reuters “They should have given us at least two-to-three months of time, we did not know about such a substantial policy.” Indian producers cited by Reuters fear it could close off export markets, specifically to Europe. Prior to its invasion of Ukraine, Russia had been a major steel exporter to the European Union. European buyers have since shunned Russian steel, and Indian exporters were looking to fill the void. The country exported 13.5 million mt of finished steel in 2021, up from 10.8 million mt in 2021, according to the Ministry of Steel. (For a more detailed overview, please see our latest post: India's Steel Exports Tariffs Shock Producers) |
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These tariffs could be supportive to CME HRC prices if global supply is reduced. Also, re-routing of steel to the Eurozone and away from the US could strain American supplies and increase prices. CME HRC steel is thinly traded, but end-users that are concerned about increasing prices could consider financial swaps or purchasing call options. Such positions are standard for consumer hedging, but they can result in opportunity costs or cash costs if metal prices decline. Please contact AEGIS for specific strategies that fit your operations. (5/24/2022) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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AEGIS Insights |
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05/23/2022: India's Steel Exports Tariffs Shock Producers 05/18/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 05/11/2022: China's Metals Exports are on the Rise |
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| Important Headlines | ||
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5/23/2022: India raises export duty on iron ore, Chinese reception mixed 5/23/2022: Moody's says increase in India's export duties on iron ore, pellets to raise costs for steel mills 5/22/2022: Indian steelmakers face hit on Europe deals over export tax, Jindal executive says 5/21/2022: Work suspended at Botswana's Khoemacau copper mine after accident kills two
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Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.
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