Govt gets cracking on prices, truck strike

Cuts to cause a revenue loss of Rs 305 crore.

The government today cut the import duty on non-alloy steel, other than seconds and defectives, from 10 per cent to 5 per cent and on ships for breaking from 15 per cent to 5 per cent. The 7 per cent duty on melting scrap of iron and steel, other than stainless steel or heat resisting steel, has been abolished.

The cuts are estimated to cause a revenue loss of Rs 305 crore to the government for the remaining part of the current financial year.

Steel stocks fell after the move. While the Tata Steel scrip fell 2.39 per cent to Rs 259.70, the Steel Authority of India scrip fell 2.77 per cent to Rs 40.35.

Steel industry sources said the move was unlikely to have an impact on hot-rolled steel producers owing to the high steel prices in global markets.

"The current prices are in excess of $700 per tonne. As a result, there is still a price difference of at least Rs 3,000 per tonne between local HR coils and imported HR coils. Even after today's reduction in customs duty, a difference of Rs 1,500-2,000 per tonne will remain," said an industry source.

However, most HR coil producers said there could be a problem if global prices were to take a tumble.

"In the long run, a protection of a mere five per cent will not suffice to protect the domestic steel industry in case international steel prices take a downturn," the Indian Steel Alliance, which represents hot-rolled steel producers, said in a statement.

On the other hand, today's duty cuts are expected to impact the prices of long products, which are used in construction. Long product prices had gone up by about Rs 5,000 per tonne in the last few months due to supply shortage.

The reduction in the import duty on ships for breaking will also improve the availability of long products in the country. Almost 70 per cent of the long products market is in the unorganised sector.