Mumbai: The steel prices should fall following a cut in factory gate duty and give a boost to demand that has been showing signs of a pickup, company officials and an analyst said.
The government announced on Tuesday an across the board cut in excise duty to 8% from 10% and lowered service tax rates by 2 percentage points to protect the economy from the impact of the global economic crisis.
“Once the notification is issued, we will pass it on,” said Jayant Acharya, president, sales and marketing at JSW Steel Ltd, a large steel maker.
Demand for steel in India has been improving, especially from construction of airports and other large projects, an official said.
“In January and February we have seen a strong pickup in our sales. It may not exactly reflect on the bottomline, but definitely demand is coming up at the current market prices,” said Arvind Parakh, director of strategy and business development at Jindal Stainless Ltd. Steel prices have been under pressure across the world as a recession in major economies slashed demand.
“The players should be able to pass on the benefit,” said Pawan Burde, senior research analyst for metals and mining at Angel Broking.
Mild steel ingots on the National Commodity & Derivatives Exchange Ltd was at Rs22,400 ($449) a tonne, down 40% from a peak of Rs37,500 in last June.
India’s economy, Asia’s third-largest, is forecast to expand about 7% in the financial year ending March, down from 9% in the previous year but well above growth rates in many countries.