STEEL Authority of India (SAIL) set the ball rolling for passing on excise duty

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hike to consumers. The government-owned company, on Wednesday, announced an increase in prices by up to Rs 600 a tonne effective March 1. Other companies are expected to follow suit.

Excise duty on steel was raised by 2 per cent in the budget.

“Yes there is an increase of Rs 500-600 a tonne

due to the excise duty hike. The price increase is effective from March 1,” SAIL chairman S K Roongta told reporters on the sidelines of All India Induction Furnace Association meet here.

“Tata Steel has spared the highly popular galvanised corrugated sheet (GC Sheet) from the price rise to give relief to the rural consumers. The company has made a modest hike in select products only,” a company statement said.

Steel secretary Atul Chaturvedi said higher excise duty will push up steel prices but refused to term it inflationary.

“How can the industry come out of recession if it does not start earning money. The companies can earn money when either raw material prices go down or end product prices go up, but for the last 30 months, steel prices have been in the acceptable band, so there is nothing alarming,” Chaturvedi added.

Jayant Acharya, marketing manager of JSW Steel, said, “The price does not change. It is excise duty that is chargeable on actuals and goes to the government, not the company.”

According to an Essar Steel official the latest hike was merely what is being paid on actuals.

Prices in the retail market for hot rolled coil have already gone up by almost Rs 2,000 per tonne and analysts predict another price hike in April on account of excise duty hike and jump in raw material contract prices.

Indian mills have increased domestic commercial hot rolled coil prices for April production on rising international prices and higher costs of production. Prices have risen by at least Rs1,000 to Rs1,500 per tonne ex-mill to Rs 30,500-32,000 per tonne.

While mills have yet to officially increase the price of cold rolled steel, basic prices, exclusive of taxes, have already risen by Rs 1,000-1,500 per tonne to Rs 36,000-36,500 per tonne.

Both iron ore and coking coal contracts for 2010 are expected to be 35-45 per cent higher than last year, and this could push up the cost of steel production by about $75 per tonne, analysts said.