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Can Arun Jaitley show some mettle for the steel sector in this Budget?

Can Arun Jaitley show some mettle for the steel sector in this Budget?

 

News is brought to you by Mr. Shailesh Karia

 

Published on 14th February, 2018

 

Rising raw material costs, high customs duties and lower than expected demand growth seem to be major pain points that steel sector players want the Budget to tackle this year. Companies feel improved supplies of locally available inputs like coal, iron ore and graphite electrodes, removal of customs duty on key raw material like ferro-nickel and scrap for stainless steel and an overall thrust on demand generation through higher infrastructure spending will make life a bit easier for them.

At a time when the sector is saddled with 40 million tonne (mt) of surplus installed capacity, with only a few profitable plants amid a bunch of others like Essar Steel, Bhushan Steel and Electrosteel battling debt and insolvency resolution, experts feel, it is important that the operating cost of the sector is brought down.
For this, steelmakers want assured supplies of locally available inputs like iron ore.

This year, iron ore exports are tipped to increase to 30 mt as opposed to 24 mt last year. With domestic supply falling short of demand, this has pushed up prices. Similarly, other key steelmaking raw materials like dolomite, graphite electrodes etc have also seen major price hikes. Exports of graphite have increased by 49% with only a 13% decline in their imports. Industry feels measures to check exports would improve supply and stabilise prices in the domestic market.

"Iron ore export duty should be re-imposed," Seshagiri Rao, joint MD of JSW Steel said adding, “an export duty of 30% should be imposed on exports of graphite electrodes.”

Steel experts too believe that the landed price of raw materials is an important area to focus on. "Reduction of import duty on coking coal, rationalisation of freight and subsuming of the District Mineral Foundation (DMF), National Mineral Exploration Trust (NMET) etc. into the Goods and Service Tax (GST) are needed urgently," Niladri Bhattacharjee, partner, strategy & operations, mining & metals, KPMG in India said.

While this could a bone of contention between exporters and merchant miners, the steel sector is equivocal in its demand for raising domestic consumption of steel.   

 

Source : https://economictimes.indiatimes.com//

 





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