The fresh stimulus announced by the government today for commodities like steel, cement, zinc and ferro alloys is likely to spur demand to some extent. However, industry leaders feel more needs to be done to get these sectors back on track.
The government’s decision to exempt TMT bars and structurals from countervailing duty (CVD) would help narrow the gap between landed import and domestic prices.
CG Patil, director (commercial), Rashtriya Ispat Nigam Ltd (RINL), a public sector long product manufacturer, said landed imports of TMT bars were available for Rs 26,000 a tonne, while the domestic prices were Rs 32,000 a tonne. The exemption would narrow the gap by around Rs 3,000 a tonne.
“To that extent it will act as a disincentive but what the government should do is to increase the import duty to 20 per cent from the current level of 5 per cent,” said Patil.
Patil said the measures should be extended to products like wire rods.
The government also withdrew full exemption of basic Customs duty on zinc and ferro alloys.
Arvind Parakh, director for strategy and business development, Jindal Stainless, said this would harden ferrochrome prices to some extent and help in renewing demand.
Ankit Miglani, director (commercial), Uttam Galva Steels, a major cold rolled and galvanized manufacturer from western India, said zinc prices would increase by Rs 500-1,000 per tonne for the galvanized products. Zinc accounts for 7.5 per cent of the cost of making galvanized steel.
However, whether galvanized prices would be increased would depend on hot rolled prices. Hot rolled steel and zinc are the two major inputs for the product.
The Centre also withdrew exemptions from CVD and Special CVD on cement imports.
HM Bangur, president, Cement Manufacturers’ Association, and managing director of Shree Cement, said: “This is a welcome and timely step from the Centre. As a result, capacity utilisation will increase, though there will be regional variations. The north Indian players are likely to benefit more. The average capacity utilisation in the country is around 74 per cent.
