Financial Daily from THE HINDU group of publications
Wednesday, Mar 01, 2006


News
Features
Stocks
Shipping
Archives
Google

Group Sites

Opinion - Metals
Industry & Economy - Budget


Metals: Reflected lustre

Radhika Kamath

Duty cuts
Import duty on primary and secondary non-ferrous metals cut from 10 to 7.5 per cent
Restoration of 5 per cent duty on import of steel melting scrap
Reduction of duties on ores and concentrates from 5 to 2 per cent

The reduction of Customs duties on primary and secondary non-ferrous metals from 10 to 7.5 per cent is unlikely to affect the pricing power of companies such as Hindalco, Sterlite Industries, National Aluminium and Hindustan Zinc.

The firm international price trends in these metals will continue to offer them headroom to keep the domestic prices at current levels.

The reduction is, however, likely to restrict the scope for a hike in domestic prices. The price differential between landed costs and domestic prices has narrowed to about 3 per cent from over 10 per cent a year ago, thus leaving very little scope for price hikes by domestic players.

Indirect impact

The budgetary measures to boost investments in rural development, road infrastructure and power are expected to have a positive impact on the steel sector.

Despite the lack of any specific measures to boost its prospects, the steel industry can hope to reap the indirect benefits of the boost to investment in the core sector.

On the other hand, the steel industry is unlikely to be disturbed by the reduction in Customs duty on alloy steel in the near term.

Steel prices, even after witnessing a cool off by about 25-30 per cent from their historic highs in early 2005, have recovered partially and still remain above the long-term average level.

However, competitiveness with imports could be under threat in the long-term.

The restoration of import duty of 5 per cent on steel melting scrap is unlikely to have an impact on the steel industry as a large number of steel makers use sponge iron.

This may, however, be viewed as a disincentive to trade in scrap in the open market.

On the raw materials front, the Finance Minister has sought to amend the definition of captive consumption so as to allow coal mining by producers with firm supply contracts with steel companies (cement and power being others).

This is unlikely to help domestic steel producers who continue to import a large portion of coal, as coal available in domestic market fails to meet their quality standards.

More Stories on : Metals | Budget | Excise and Customs

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page



Stories in this Section
Full credit on the farm front


BACK TO POPULISM OF YORE
Big bonanza for the small car
A difficult task well done
Boost to booming economy
Not rocking the boat
Mixed impact
Encouraging competition
A `taxing' exercise
`Chai' with masala
Harnessing winds of continuity
Growth and equity
Undertone positive
Sad call for telecom
Continuity in momentum
Enhanced need for funds
Pragmatic, with few surprises
Ensuring the trickle-down
Budget hits all the right notes
No major reaction
Gathering pace
Judicious tinkering
Wiring up the nation
Taxes not recovered crossed Rs 1,11,000 cr
Services sector provides Rs 23,000 cr
Let down on CST
The wind is blowing, take cover!
A touch more than a stitch in time
Duty rationalisation for man-made textiles — More allocation for textile schemes; Rs 189 cr for textile parks
A few goodies for rural impetus, lower costs
Excise duty cut, a boon for small carmakers — `Small cars' are Maruti 800, Wagon R, Zen, Alto, Hyundai Santro, Indica diesel
No special drive: auto parts sector
`There's further scope for reducing raw material duties to Asean levels'

A positive program
Metals: Reflected lustre
A draft of demands
NBFC granted audience
Sighs of relief and dropped jaws — The FM seems content more at not ruffling many feathers
A liberal look to fringe benefit tax — FM has delivered what he had promised
Accent on digitisation — The income-tax offices will undergo business process re-engineering
How the tax breaks pan out
Tepid changes to corporate tax
Tame docile budget
Educational loans



The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line