Indian large steel producers have increased their re-bar offers by about INR 500/MT (USD 8)
Prices have increased in adjustment with new tax structure (GST) which was implemented on 1st July 2017. According to this, entire country will have one tax rate (steel being categorized under 18% slab). Earlier steel was taxed at around 17.5% to 19%, which was bifurcated as 12.5% excise duty and 5% VAT and 1-2% entry tax.
Re-bar offers by the large producers are assessed around INR 34,000-34,500/MT, Ex-Delhi (Northern Region) and INR 33,000-33,500/MT, Ex-Mumbai (Western Region). The above mentioned prices are for 12-32 mm & excluding GST at 18%.
Earlier manufacturers used to offer their material including 12.5% excise duty and excluding VAT/CST.
Organized steel manufacturers to benefit
Large steel makers are bullish on the new tax structure. Most of them believe, this will help the organized player.
“Definitely GST is a transformation change. It would stimulate the demand as costs would come down. Overall, the GST framework is good. It would eliminate a lot of trade that is happening outside the system.That is an opportunity for the organized sector (to grab market share).” said a senior official at JSW steel.
If the government’s One Nation One Tax slogan really plays out as per script and states don’t create any entry barriers in new forms, new markets will emerge for steelmakers within India.
JSW for instance, that has a wider presence in south and west India, would aim to capture markets in the north and east which is mainly a market for construction steel products such as longs, he further added.
JSW steel produced about 3.91 MnT crude steel out of which 0.83 MnT is long steel in Q1 FY 18.
Sources: SteelMint Research
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