The Hindu Business Line : No impact of duty cut on steel prices

THERE was a note of overall caution in the retail market for various primary steel products and most of the secondary steel items on Monday after the spate of tax restructuring by the Government during the weekend.

And, more importantly, prices have not come down, which was the basic intention of the entire exercise undertaken by the Government. On the other hand, volumes were less by more than 70 per cent.

According to officials in the stockyards of various companies, the existing stocks will attract the 16 per cent excise duty. But the new stocks that leave the plants after the new duty structure that came into effect since Saturday will get the benefit of the reduced eight per cent excise.

According to officials in the primary steel manufacturing companies, the volumes were abysmally low because there was a clear case of hoarding by big retailers with high storage capacity in the expectation that prices will keep on rising in line with the international prices.

"Nobody expected the Government to step in and control prices through fiscal measures at this stage," an official said. Now, these traders have landed in a soup following the excise duty cut as it is evident that prices will start moving down as soon as the new stocks from the plants reach the stockyards and godowns within the next five to seven days.

"The whole day was very calm and quiet and one may say, confused, also. This is probably because everyone is trying to wait and watch the trend and see what happens over the next few days. So, except those who are the real users and short of stock, no one is buying," said an official in one of the steel companies.

"Also, there is confusion over whether the excise duty on pipes and tubes too, will be cut to eight per cent from 16 per cent as announced on Friday by the Ministers but has not been notified as yet," officials said, and added that the impact of the price cut will be felt only by around this weekend.

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