Steel prices may fall
For the ‘aam aadmi’ , the reduction in steel prices could mean reduction in the construction costs of a house and lower input costs for automobiles, besides other capital goods.
By TNN |
NEW DELHI: Steel makers, who choose to pass the full benefit of the 2% point excise duty cut announced on Tuesday, could soon announce price cuts to the extent of Rs 500-600 per tonne on hot rolled coil (HRC) steel and TMT (thermo mechanically treated) bars. For the ���aam aadmi��� , the reduction in steel prices could mean reduction in the construction costs of a house and lower input costs for automobiles, besides other capital goods.
Though Tata Steel declined to comment, JSW Steel said it will pass on the excise duty cut to customers. ���This excise duty cut will have a definite impact just like any other reduction on indirect taxes has brought so far. A 2% cut is significant and we will pass it on immediately,������ JSW Steel finance director Seshagiri Rao said. Industry experts say that excise duty cuts are usually passed on by companies in form of price-cuts , or discounts . Last time when the excise duty was cut, steel companies swiftly passed on the benefits to customers.
After a continuous decline from September 2008, HRC steel is currently selling at Rs 26,500 a tonne while rebars /TMT bars fetch Rs 26,300 a tonne. A 2% excise cut will mean that prices will fall by Rs 500-600 , if companies pass on the full benefit, said Pawan Burde of Angel Broking. He said companies��� profitability will not be affected and this excise cut may even support flagging growth of steel.
Domestic steelmakers have raised production from the low levels of November-December 2008 and many expect sales volume to improve on a quarter-on-quarter basis for the January quarter. Vikram Amin, director, sales & marketing , Essar Steel, said, ���The reduction of excise duty in the present economic condition will be beneficial as this will have a possibility of increasing demand and give a boost to the sagging economy.������
Though Tata Steel declined to comment, JSW Steel said it will pass on the excise duty cut to customers. ���This excise duty cut will have a definite impact just like any other reduction on indirect taxes has brought so far. A 2% cut is significant and we will pass it on immediately,������ JSW Steel finance director Seshagiri Rao said. Industry experts say that excise duty cuts are usually passed on by companies in form of price-cuts , or discounts . Last time when the excise duty was cut, steel companies swiftly passed on the benefits to customers.
After a continuous decline from September 2008, HRC steel is currently selling at Rs 26,500 a tonne while rebars /TMT bars fetch Rs 26,300 a tonne. A 2% excise cut will mean that prices will fall by Rs 500-600 , if companies pass on the full benefit, said Pawan Burde of Angel Broking. He said companies��� profitability will not be affected and this excise cut may even support flagging growth of steel.
Domestic steelmakers have raised production from the low levels of November-December 2008 and many expect sales volume to improve on a quarter-on-quarter basis for the January quarter. Vikram Amin, director, sales & marketing , Essar Steel, said, ���The reduction of excise duty in the present economic condition will be beneficial as this will have a possibility of increasing demand and give a boost to the sagging economy.������
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