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Run-up to the Budget: Chlor alkali
Soda ash: State of the industry (2000-01)
- Demand for soda ash is expected to increase by 8 per cent as compared with that in 1999-2000. Demand is expected to increase due to an expected increase in demand from the detergent sector.
- Production of detergent powders is expected to increase as compared with detergent bars, as detergent manufacturers have been substituting bars with detergent powders.
- Supply is expected to increase as Nirma has commenced operations at its new plant in Bhavnagar.
- During the April-September 2000 period, prices declined to their lowest levels since 1995, due to an increase in supply. However, during the September-January 2000-01 period, prices increased by 30 per cent, due to an increase in demand and producer attempts to rationalise supply, by increasing exports.
- In 2000-01, average price realisations are expected to be marginally lower as compared with those in 1999-2000. In addition, raw material costs are expected to increase by 5 per cent. Hence, margins of soda ash producers are expected to be marginally lower as compared with those in 1999-2000.
Caustic soda: State of the industry (2000-01)
- Demand for caustic soda is expected to increase by 2 per cent as compared with that in 1999-2000, in line with the growth in the derivative sectors.
- Domestic supply is expected to increase by 3 per cent.
- During the April-September 2000 period, caustic soda prices declined due to an oversupply situation in the market and no significant increase in demand. However, during the September-January 2000-01 period, prices increased as producers lowered operating rates.
- Margins of caustic soda producers are not expected to increase significantly, due to an increase in power costs.
Chlor alkalies: Industry expectations from the Union Budget (2001-02)
- A reduction in the customs duty on membrane electrolysers: The Alkali Manufacturers Association of India has asked for a reduction in the customs duty on membrane electrolysers, from 15 per cent to 5 per cent. It has also asked for the removal of surcharge and SACD, from the existing rate of 10 per cent and 4 per cent respectively.
- A reduction in the customs duty on captive power plants: The Alkali Manufacturers Association of India has asked for a reduction in the customs duty on imports of captive power plants, having a capacity of over 4 MW. (At present, the import of a captive power plant has a basic duty of 25 per cent, surcharge of 2.5 per cent, additional duty of 16 per cent, and a SACD of 4 per cent.)
Chlor alkalies:Prices & duties
Chlor alkalies: Domestic and international prices, and landed cost
| |
Tariffs |
Domestic
prices |
International
prices |
Landed
cost |
| |
(per
cent) |
(Rs/tonne) |
($/tonne) |
(Rs/tonne) |
| |
1999-2000 |
2000-01 |
Price
type |
Jan
2001 |
Price
type |
Jan
2001 |
Jan
2001 |
| |
Customs |
Excise |
Customs |
Excise |
|
|
|
|
|
|
Caustic
soda |
38.5 |
16 |
44.04 |
16 |
Flakes:
delivered |
14,423 |
Liquid:
cif
FE
Asia |
250 |
23,775 |
|
Soda
ash |
38.5 |
16 |
44.04 |
16 |
Ex-factory |
8,050 |
fob
US
Gulf |
110 |
7,986 |
|
Hydrogen
peroxide |
38.5 |
16 |
44.04 |
16 |
Market
50%
w/w |
26,000 |
cif
Mumbai |
320 |
25,386 |
|
Titanium
dioxide |
40.0@ |
16 |
44.04# |
16 |
Market
rutile |
173,000 |
cif
Mumbai |
2,000 |
158,665 |
FE: Far East
@ In 1999-2000, basic duty on titanium di oxide was 40 per cent and there was was no surcharge.
# In 2000-01, basic duty on titanium di oxide was reduced to 35 per cent and a surcharge of 10 per cent was levied.
Notes
1) In the Union Budget 1999-2000, MODVAT credit was enhanced from 95 per cent of the excise duty paid on inputs to 100 per cent.
2) For 2000-01, the landed cost and customs duty include the SACD of 4 per cent, effective since 1999-2000. In 1999-2000, the SACD was applicable only for non-traders, and hence, has not been included in the customs duty.
Compiled by CRIS INFAC
Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.
Rediff-CRISIL Budget Impact Analysis
Budget 2001
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