New Delhi: India’s stainless steel industry said on 7 May that a cut in customs duty on nickel provided only limited relief against soaring raw material prices squeezing their margins.
The government last week cut the customs duty on nickel, used mainly to produce stainless steel, to 2% from 5% to help the industry.
“It is like a little pinch of salt. But whatever it is, we will pass it on to our customers,” N. C. Mathur, president, Indian Stainless Steel Development Association, told Reuters.
He said that the prices of some grades of stainless steel would be reduced by about 2%. The domestic price of stainless grades range from Rs80,000 ($1,969) to Rs2 lakh a tonne.
The global price of nickel has doubled to $50,000 a tonne from $26,000 in 2006.
On Friday, LME stocks stood at 4,716 tonnes, of which 3,354 tonnes, less than one day’s worth of consumption, was available to the market.
Mathur said the cost of production would reduce by up to Rs4,000 a tonne on stainless steel grades which use primary nickel.
“But 50% of our nickel imports are met through scrap for which there is no duty relief,” he added.
He said most of the leading countries producing stainless steel have scrapped customs duty on nickel.
Two-thirds of world nickel output is used to make stainless steel, and demand from the industry is expected to grow 7.5 percent this year.
Nearly 70% of stainless steel products made by Indian manufacturers have a low nickel content of 1-4%, but the rise in prices still hurts.
Mathur said the Indian industry was looking at ways to bring down nickel content wherever possible, adding that low nickel grades could be used for kitchenware and automobile products.
It was difficult to replace nickel for stainless steel for industrial applications such as making machinery for the pharmaceutical and food-processing industry, he said.
India produces 1.7 million tonnes of stainless steel and exports 600,000 tonnes annually. Production is growing at 10-12% a year.