Union Budget 2011: Steel cos cheer iron ore export tax, infra spend

India's steel industry cheered the 20 percent export duty hike on iron ore in the FY12 federal budget that will help contain escalating raw material costs and gave a thumbs-up to higher infrastructure spends, which will boost steel demand in the country. 

Steel makers have been reeling under margin pressure on rising input costs led by recent supply disruptions due to floods in Australia, a leading exporter to global markets. 

"Higher export duty on iron ore has been a long pending demand of the steel industry and the budget has taken care of the issue," said C.S. Verma, chairman of state-run Steel Authority of India . "The increase in export duty on iron ore will increase its availability in the domestic market, thereby stabilising price and helping domestic steelmakers," Nittin Johari, chief financial officer of Bhushan Steel , said. 

The hike in export duty in the budget for the year to March 2012 was widely expected as the country tries to underpin its rapidly-growing economy with investment in infrastructure. Steel Minister Beni Prasad Verma had also called for curbs on exports of iron ore on Friday. 

"There is nothing dramatic but there are more positives for the steel sector in this budget than negatives," said Ankit Miglani, director at Uttam Galva Steels. 

Officials said the withdrawal of export duty on pellets should encourage mining firms to set up more pellet plants, that will help the steel industry. Infrastructure-related investments announced by Finance Minister Pranab Mukherjee will also boost steel demand in the country, they added. 

India has earmarked a corpus of 180 billion rupees in FY12 on rural infrastructure development fund and has estimated a total expenditure of 12.6 trillion rupees in the period, with a focus on eliminating supply bottlenecks in the food sector. 

"There is a plan, under agricultural investment, to build grain silos, which are made out of galvanised steel. So, this will be a huge positive for the steel industry," Miglani added. SAIL's Verma said the continued thrust on infrastructure and manufacturing will help steel demand and higher support for housing sector "is a step in the positive direction." 

The finance minister abolished import duty on stainless steel scrap from 2.5 percent earlier, helping producers lower their cost of production. JSL Stainless, India's largest stainless steel maker, expects savings of $50-$60 per tonne on purchase of scrap but overall reduction in input cost will be around $17 per tonne, its director Arvind Parakh said. 

The BSE metal index ended flat at 15,348.8 points, with Tata Steel , JSL, SAIL and Uttam Galva falling 0.34-1.7 percent while JSW Steel and Ispat Industries ended slightly positive. The broader 30-share benchmark BSE index finished 0.69 percent higher at 17,823.4 points. 

Share this:

About Jessica Priston

Ut tellus dolor, dapibus eget, elementum vel, cursus eleifend, elit. Aenean auctor wisi et urna. Aliquam erat volutpat. Duis ac turpis. Integer rutrum ante eu lacus. Vestibulum libero nisl, porta vel, scelerisque eget, malesuada at, neque. Vivamus eget nibh. Etiam cursus leo vel metus. Nulla facilisi. Aenean nec eros.

  • Website
  • Google+
  • Rss
  • Pinterest
  • Instagram
  • LinkedIn
  • Vimeo
  • Youtube
  • Flickr
  • Email

Related News

  • Cashback site Cashkaro now offers restaurant discounts

    India’s e-commerce market looks large and lucrative enough from the outside, but insiders know it is very challenging. In fact, the number of e-commerce sites and businesses is growing so fast here today that the competition is cut-throat. This

  • What is Viscose Material? Advantage and disadvantage of viscose.

    Viscose is a unique form of wood cellulose acetate used in the nnmanufacture of a number of different products. This includes items for nnthe medical industry, though it is perhaps most common as a major nningredient in the production of the fabric r

  • Honda launches new CBR 250R bike
    Honda launches new CBR 250R bike
    July 01, 2014 5:50 am

    New Delhi: Honda Motorcycle & Scooter India (HMSI) launched a new edition of its global sports performance bike CBR 250R priced between Rs 1.56 lakh and Rs 1.86 lakh (ex-showroom Delhi). The 2013 edition CBR 250R is available for sale across a

  • Zara has opened store at Ambience mall, Gurgaon

    Zara, has opened its new store at Ambience mall, Gurgaon. Spread over 28,000 sq.ft. across two floors the store has taken the space earlier occupied by Debenhams. With this Zara now has twelve stores in India. It is present in 86 countries with