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Steel firms pass on excise benefit

business Updated: Dec 08, 2008 21:37 IST
Reuters
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Steel is set to be cheaper by Rs 1,100-1,800 a tonne as steel makers have decided to pass on the entire benefit of the excise duty cut to customers.

The Centre, on Sunday, unveiled a slew of measures, including a 4 per cent cut on excise duty on steel and its products. “The reduction is 4 per cent which amounts to a fall of Rs 1,100-1,800 (per tonne) depending on value-added products,” said Sharad Mahendra, associate vice president of sales and marketing of JSW Steel.

Cold-rolled steel prices will fall by about Rs 1,000-1,200 a tonne, Bhushan Steel chief financial officer Nittin Johari. The firm is now also considering reviving output on hopes the government's stimulus package will boost demand for the alloy, he added.

Other steel firms such as Ispat Industries and Uttam Galva also said they would pass on the excise cut to their customers immediately.

“Excise duty cut means further downside for steel prices with no change in the profitability of companies,” said Pawan Burde, senior analyst at Angel Broking.

Steel makers will not revive production immediately as inventories were still very high, Burde said. “The major worry still is demand. This step will not boost consumption but will only provide support to falling demand.”

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