Steel firms up on excise hike in budget

NEW DELHI: Steel prices have increased by 2-3% after hike in central excise duty in the budget. While the net impact of excise duty hike, from 8% to
10%, comes to around Rs 600 per tonne, a few producers have also factored in hike in input cost and raised prices by up to Rs 1,000 per tonne.

With the increase, the benchmark hot rolled coil (the most produced steel item that is used by a cross-section of the industry) prices have firmed up to a level of Rs 34,000-Rs 36,000 per tonne, depending on the grade.

“There is a price increase of about Rs 500 to Rs 600 a tonne due to the excise duty hike. The price increase is effective from March 1,” SAIL chairman S K Roongta said on sidelines of function here.

Private sector steel companies Essar Steel and JSW have also raised prices between Rs 500-800 per tonne. Tata Steel has moderately increased prices of select steel products while sparing galvanised corrugated sheets from any hike to give relief to consumers in the rural market, a spokesperson for the company said.

An Ispat Industries spokesperson said the steel prices have increased as raw material prices have also increased in the past few weeks. “We have increased steel prices between Rs 500 and Rs 1,000 per tonne from this month,” the spokesperson said.

The move has also created ground for increase in prices by user industries or secondary steel producers that source bulk of their products from large integrated primary steel producers. “The hike will definitely impact cold rolled coil producers who will have no option but to pass the increase to consumers,” said an official of cold rolled manufacturers association. Cold rolled coils is primarily used by FMCG companies and automobile sector.

The government, however, feels that the increase in prices will not adversely impact the user industries and not result in higher inflation. “If we see steel prices in the last 30 months, the current scenario is not alarming,” steel secretary Atul Chaturvedi said. “You have to distinguish between inflation and recession. Companies have to earn money and this could be done only if either raw material prices go down or their steel prices go up,” he added.

Steel prices have remained firm in most part of fiscal 2009-10, rising almost 40% from close to Rs 25,000 a tonne at the beginning of the year to nearly Rs 35,000 a tonne now. The prices have moved up between Rs 500 and Rs 1,000 per month in most part of the fiscal, with some price reduction in select product categories in November and December.