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Rediff.com  » Business » Budget hikes duty on ores, concentrates

Budget hikes duty on ores, concentrates

March 02, 2011 12:32 IST
Budget Provisions:

Basic customs duty on Ferro nickel has been reduced from 5 per cent to 2.5 per cent.

Basic customs duty is being increased on all ores and concentrates from 2 per cent to 2.5 per cent.

Reduction in customs duty on vanadium pentaoxide and vanadium sludge from 7.5 per cent to 2.5 per cent.

Impact:

The Budget has hiked customs duty on all ores and concentrates from 2 per cent to 2.5 per cent, including manganese ore, chrome ore, tungsten ore, nickel oxide and vanadium ore. This will increase the landed cost of these inputs for ferro alloy producers.

There will be some marginal benefit due to reduction in the customs duty on vanadium pentaoxide and vanadium sludge by 5 per cent to 2.5 per cent.

Cut in customs duty on Ferro nickel will benefit alloy and stainless steel producers, but will not benefit/affect domestic ferro alloy producers as the entire domestic required is 100 per cent imported.

IFAPA recommended increase of duty on Ferro alloys from 5 per cent to 7.5 per cent. But they remain at 5 per cent. Instead, the basic raw materials such as have been hiked from 2.0 per cent to 2.5 per cent.

This should lead to squeeze in the margins of the domestic ferro alloy producers dependent on imports. Players with captive manganese ore/chrome ore are relatively better placed.

Scrips to Watch:

Nav Bharat Ventures, Ferro Alloy Corporation

Outlook:

Union Budget 2011-2012 is marginally negative for Ferro alloy sector due to hike in customs duty on ores from 2.0 per cent to 2.5 per cent. The decrease in customs duty on vanadium pentaoxide and vanadium sludge by 5 per cent to 2.5 per cent is beneficial.

Overall, the Union Budget 2011-12 is marginally negative for the ferro alloy sector in general, and for players importing ores for producing ferro alloys in particular.

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