JSW Steel's Seshagiri Rao says steel prices will not correct significantly as then firms will be unable to make money

India imposed a 15 percent export duty on steel to increase supply for domestic consumer industries and tame inflation, and  Seshagiri Rao, Joint Managing Director & Group Chief Financial Officer at JSW Steel, says it is a temporary step and exports have to continue to retain customers.

“In India, the Indian steel prices are dependent upon the landed cost of imports. If global prices go up, Indian prices will go up. So, the step government of India has taken to impose 15 percent export duty on the export of steel, is mainly to contain inflation. So, we hope once inflation comes under control, this measure will go away,” Rao told CNBC-TV18 in an exclusive chat.

He said steel prices have corrected more than 10 percent.

“Unless cost pressure comes down, I don't expect steel prices to correct significantly from the current levels because steel companies will not be able to make money,” Rao said.

“As far as the cost pressures are concerned, coking coal prices are at a level of $500. And the iron ore prices are at a level of $145-$130 per tonne,” he said.

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India has also imposed a steep export duty on iron ore while import duties have been cut on inputs like coal to reduce the cost of production for steelmakers.

Rao believes there is a need for creating capacity to meet export demand.

“Total capacity of steel in India is 150 million tonnes, last year we produced 120 million tonnes. which is more than 81 percent capacity utilisation. So, this year, if there is incremental capacity, if we have to produce 130-135 million tonnes of steel. If there is an opportunity to do more exports because of the Ukrainian and Russian deficits, which have been created in the European markets, there is a need for creating additional capacities,” he said.