India's imposition of a 30% chrome ore export duty will further restrain overseas sales, even if domestic demand is the key inhibiting factor, according to market participants.
“Chrome ore exports will only decline further with the 30% export duty in place. The duty was at $60 per tonne, but now it will be about $80 per tonne at current prices,” said Sunir Khurana, director marketing of state-owned trading company Minerals & Metals Trading Corp (MMTC), which is the conduit for all India’s chrome ore and concentrate exports.
Ferro-alloy producers in India told Metal Bulletin last week that the strong domestic market was a more significant factor in reducing imports
than export duties.
India’s efforts to establish itself as a major steel producing nation are reflected in its policy towards chrome ore, the raw material for the production of ferro-chrome, which is used in every grade of stainless steel.
The government has imposed successive hikes in export duty over the past five years, in moves that are being discussed in South Africa, where there are controversial moves to impose a $100-per-tonne export tax.
New Delhi first imposed an export duty on chrome ore and concentrates in February 2007, at a rate of Rs2,000 ($40) per tonne. The duty was raised to Rs3,000 per tonne in February 2008.
In March 2012, the Indian government moved to an ad valorem tariff of 30%, meaning that the export duty was imposed at a rate of 30% of the value of the chrome ore or concentrate sold.
“India has a yearly ceiling of 350,000 tonnes; that’s the maximum amount of chrome ore that can be exported out of the country during the year. But MMTC has not exported more than 40,000 tonnes this financial year,” Khurana said.
“And the major portion of chrome ore exports has been concentrate, which in its present form is not usable in Indian industry,” Khurana said.
Chrome ore and concentrate exports in the financial year ended March 2009 stood at 377,000 tonnes, of which 41,000 tonnes was ore and the remaining 336,000 tonnes was concentrate.
For the year ended March 2010, total exports rose to 585,000 tonnes (93,000 tonnes of ore; 492,000 tonnes of concentrate).
For the year ended March 2011, exports dropped to 527,000 tonnes (35,000 tonnes of ore; 492,000 tonnes of concentrate).
For the year ended March 2012, the figures for concentrate exports stood at 409,000 tonnes, with ore exports expected to be insignificant, though the exact data is not yet available.
Industry officials maintain that the figure for chrome ore exports for the year ended March 2012 could come in at about 40,000 tonnes, but market participants are dubious.
Indian ferro-chrome exports also subdued
According to data from the Indian Ferro Alloy Producers Assn (Ifapa), low levels of chrome ore exports have been accompanied by falling levels of ferro-chrome exports.
Ferro-chrome exports in the year to March 2011 fell to 135,308 tonnes, from 466,219 tonnes in the year to March 2010.
Exports of ferro-chrome in the year to March 2009 had been 488,700 tonnes.
The figure for the year to March 2012 is expected to be higher than the 2011 level, however.
India has a ferro-chrome smelting capacity of over 1 million tpy, which has been growing by about 5% annually, the association said.
Domestic demand for ferro-chrome in India is tied to the expansion of the domestic steel industry, but the increase in demand from overseas markets will also fuel growth, according to Ifapa.
“As exports increase, domestic production of ferro-chrome will also increase. The Asian market will fuel most of these exports,” Ifapa secretary-general TS Sundereshan said.
In the year ended March 2009, India’s ferro-chrome production stood at 790,000 tonnes. It rose to 891,000 tonnes in the year ended March 2010, and 1.03 million tonnes in the year ended March 2011.
Statistics for ferro-chrome production in the financial year ended March 2012 have not been finalised, but output is expected to surpass 2011’s growth, Sundereshan said.