Indian steelmakers may not see much of their demands have been met in the Budget; however, none deny that proposals such as record allocation to the infrastructure sector and according infrastructure status to the affordable housing segment would stimulate the much-needed demand for steel in the coming days.
Perhaps nothing would have been more positive for them from the Budget than the measures that would spur domestic demand. Steel demand growth has been languishing at 3.3% during the April-December period of the current fiscal, mainly because construction sector, steel’s biggest consumer, is in the midst of a crisis.
Finance Minister Arun Jaitley, who does not want the steel sector to be treated specially but gives out goodies nonetheless, has allocated 53% more to Pradhan Mantri Awas Yojana and 10% more for the infrastructure sector. He has also spoken of solar park development for additional 20,000 MW capacity, removed import duty on nickel from 2.5% earlier and reduced import duty on hot-rolled coils used in the manufacturing of welded tubes and pipes to 10% from 12.5%.
Stating that all these measures will yield “moderately positive” impact on the steel sector, rating agency ICRA said the removal of import duty on nickel will have a marginal positive impact for stainless steel players, but the impact of a reduction in import duty on hot-rolled coils used in the manufacture of welded tubes and pipes would, however, depends on whether the provisional anti-dumping duty on such steel is allowed to expire in the current month.
Tata Steel’s Managing Director T V Narendran said that focus on areas such as ports, roads, affordable housing, physical infrastructure should provide the economy, the industry and steel sector necessary impetus to meet its growth targets.
Essar Steel India’s Shivramkrishnan Hariharan said that steel sector expects incremental demand growth because of the significantly higher allocation to infrastructure, rural spending, and building of 3,500 km of railway tracks in FY17-18.
SAIL chairman P K Singh said domestic demand scenario of steel would improve handsomely as investments are expected to improve momentum of infra, rural and MSME sector.
The proposal to reduce import duty on LNG to 2.5% from 5% earlier will also help firms which depend on imported gas to run their units.
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