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Steel stocks may have little respite despite Budget 2002-03's largesse. The near term sentiment in stocks such as Jindal Vijayanagar Steel and Essar Steel (as HR Coil manufacturers) may improve.

But unless the industry's long-term structural problems such as global overcapacity and sluggishness in domestic demand are addressed, there may not be any sustainable recovery in prices.

Players such as Tata Steel may be affected to some extent as the duty differential between hot rolled and cold rolled coils may shrink to 5 per cent following a reduction in the peak ad valorem import tariffs from 35 per cent to 30 per cent.

Even the enhancement in the import tariffs on HR Coils seconds and defectives to the WTO permissible limit of 40 per cent (from 35 per cent in 2001-02) will also be only a palliative for the beleaguered industry.

BL Research Bureau

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