Steel PRICES TO SOFTEN: Cos to reduces prices by Rs 500-600 a tonne
The Economic Times, February 25, 2009, Page 11
PRICES of steel, widely used by makers of cars and consumer goods, are expected to come down by Rs 500-600 per tonne after the government on Tuesday reduced excise duty by 2%. While agreeing to pass on the benefits, steel industry executives said that along with the duty cuts, if interest rates were also reduced, it would spur domestic demand. The government cut the excise duty to 8% from the existing 10% as part of its efforts to stimulate the economy. In its vote-on-account measures announced last week, Union finance minister Pranab Mukherjee had announced large government expenditure for the infrastructure sector. Most steelmakers, including Essar Steel, JSW and Ispat Industries, have said they will pass on the benefits of the reduced excise tax to endusers. Essar Steel Holdings director J Mehra said: “Steel users will benefit as the excise duty burden on the final product will come down by 2%. These are, however, temporary measures. The government should increase spending on the infrastructure sector as it will be a key driver of growth in the future.” Steel prices (inclusive of taxes) are currently hovering between Rs 33,000 and Rs 35,000 per tonne, a drop of more than 30% from the peak of Rs 50,000 in April last year. Prior to the announcement made by the government, steel companies were paying excise tax of 10%. “We intend to pass on the excise duty cut benefits to the end users in the form of reduced final product prices. Traders will also benefit from the move,” said an executive of Ispat Industries.
TEAM ET
PRICES of steel, widely used by makers of cars and consumer goods, are expected to come down by Rs 500-600 per tonne after the government on Tuesday reduced excise duty by 2%. While agreeing to pass on the benefits, steel industry executives said that along with the duty cuts, if interest rates were also reduced, it would spur domestic demand. The government cut the excise duty to 8% from the existing 10% as part of its efforts to stimulate the economy. In its vote-on-account measures announced last week, Union finance minister Pranab Mukherjee had announced large government expenditure for the infrastructure sector. Most steelmakers, including Essar Steel, JSW and Ispat Industries, have said they will pass on the benefits of the reduced excise tax to endusers. Essar Steel Holdings director J Mehra said: “Steel users will benefit as the excise duty burden on the final product will come down by 2%. These are, however, temporary measures. The government should increase spending on the infrastructure sector as it will be a key driver of growth in the future.” Steel prices (inclusive of taxes) are currently hovering between Rs 33,000 and Rs 35,000 per tonne, a drop of more than 30% from the peak of Rs 50,000 in April last year. Prior to the announcement made by the government, steel companies were paying excise tax of 10%. “We intend to pass on the excise duty cut benefits to the end users in the form of reduced final product prices. Traders will also benefit from the move,” said an executive of Ispat Industries.
TEAM ET
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