The non-ferrous industry had been demanding higher import tariff on finished metals for quite sometime as cheaper imports were posing a major threat to the domestic producers. Thanks to Monday's Union budget announced by the finance minister, Yashwant Sinha, the scenario is likely to change though not completely. While some metal producers will gain tremendously others will get marginal relief. On the industry's demand for higher duties on the virgin metals and lower duties on scrap and ores, the goverment has imposed a flat eight per cent duty on all imports. The only metal where the government increased tariff was copper, where duties have been hikedto 35 per cent from the existing 30 per cent.Copper: An additional eight per cent duty besides the tariff should augur well for the domestic producer - Hindustan Copper. Already since June, the company increased selling prices. Copper prices touched a high of Rs 13,350 per quintal in the Mumbai market. In fact, with the rise in international copper prices inMay, the company had raised its selling prices for copper cathode, wire rod and wire bars by Rs 200 per quintal to 10,500, Rs 11,200 and Rs 10,900 respectively. The company would be major beneficiary as it does not require to import its raw material.For the last two years, lower copper prices coupled with cheap imports have been affecting Hindustan Copper's financial performance. During 1996-1997, sales of the company declined from Rs 1,118 crore to Rs 970 crore. At the same time, net loss stood at Rs 129.50 crore compared to a net profit of Rs 93 crore. Other players such as Indo Gulf Industries and Birla Copper will also gain but not to the extent of Hindustan Copper as these companies import their raw material requirements. As far as prices are concerned, with international prices remaining firm, the domestic prices are also expected to stay firm.Aluminium: Hindalco would be another major gainer from the eight-per cent levy on imports. Domestic producers of primary aluminium will also gainfrom the falling value of rupee. With the recent slide in the domestic currency against the dollar coupled with the additional import duty, the cost of imported metal has appreciated by over 15 per cent. This rise provides enough cushion to Hindalco and other producers like Nalco. Prices in the Mumbai market touched a high of Rs 8,500 per quintal. The only hitch for these producers is falling aluminium prices on the London Metal Exchange (LME). Recently, LME prices touched a 19-month low of $1,335 per tonne. At the current prices, producers are comfortable but if prices slide further, the benefits of an additional import duty will no longer hold.Lead: While Hindustan Copper stands to gain, it does not make major difference for Indian Lead. Since Hindustan Copper source its ore requirements from its own mines, an additional duty of eight per cent on the lead concentrate does not affect it. But since Indian Lead will have to import its lead concentrate, the overall impact of the additional duty willbe marginal. The price of lead risen to Rs 4,100 per quintal. On the LME, however, the prices have been in the range of $520-560 per tonne.Zinc: Hindustan Zinc would be major gainer as it sources its raw material through its own mines. But other producers such as Binani Zinc for example, will not have this advantage. Prices in the domestic market touched a level of Rs 8,100 per quintal. The zinc price on the LME are stable for quite some time and have been moving in the range of $1030-$1070 per tonne.Tin & nickel: Since the domestic production of these two metals is insignificant, the eight-per cent duty will increase cost for the user sector. Hamco Minining is entering into tin production but this is largely for exports. The company is likely to start production by the end of this year. The international prices remained firm in the past few days on fears of tight supply from the major producers like Malaysia.As for nickel, the impact of an additional duty will be offset by fall in theinternational prices. Nickel prices on the LME have touched a four-and- a half year low of $4,540 per tonne.The additional import duty will also help trading activities, says Sharad Parikh, President, the Bombay Metal Exchange. "Since trading have been left out of the additional import duties' preview, the trading activities are likely to improve". In the recent past, on account of lack of demand, imports have been close to nil in the non-ferrous metal segment.
