Nickel import duty cut not to help steel firms

The reduction in the import duty on nickel from 5 per cent to 2 per cent may not benefit the stainless steel manufacturers and the common man, though the importers would earn higher margins.

Fuelled by the buoyant demand from China and resultant global shortage, FY'06-07 has seen a jump in the international prices of nickel from $17,000 a tonne to $50,000 a tonne, an increase of around 200 per cent. The last two months alone have seen a price rise of around 50 per cent. The duty cut, therefore, will help the nickel buyers. Stainless steel manufacturers may not benefit much because of other cheaper input options and the tendency to move away from nickel.

A total of 50 per cent of the nickel required for producing 1.8 million tonnes of stainless steel in India in 2006-07 were met through nickel imports and the remaining 50 per cent came through stainless steel scrap. "Advantages to manufacturers will depend upon the extent to which they consume nickel", said an industry source.

There are three types of nickel grade stainless steel in India, 200 series, 300 series and 400 series, depending upon the content of nickel and product use. So the price cuts could vary between Rs 250 and Rs 2000 depending on the kind of grade employed. Considering that the domestic prices of stainless steel are in the range of Rs 80,000 a tonne and Rs 2.28 lakh a tonne, the price reduction may not be visible.

India imported 24,000 tonnes of nickel and 12,000 tonnes of stainless steel scrap in 2006-07. The Indian Stainless Steel Development Association (ISSDA) projects that the ongoing financial year will see a stagnation in nickel imports because of the sky-rocketing prices, but the stainless steel scrap imports might surge ahead at a growth rate of up to 66 per cent.

The importers and manufacturers of stainless steel will save around Rs 147 crore at current market prices because of the duty rebate.

N C Mathur, President , ISSDA said, "Nickel prices are a real cause of worry. Because of the highly unprecedented price rise, our balance sheets are being badly hurt. We will request the government to do away with custom duties completely."