Steel stocks melt on royalty hike concerns, weak Chinese data

Shares of steel companies were hammered down by up to 3 per cent today on concerns over higher royalty rates on minerals and weak data from China, the biggest consumer of metals.
Steel Authority of India Ltd lost 3.17 per cent. Tata Steel was down 1.62 per cent. Jindal Steel & Power fell by 1.80 per cent on BSE.
Shares of JSW Steel fell by 0.94 per cent. NMDC counter went down by 0.71 per cent.
The government had yesterday given its nod to increasing royalty rates on minerals including iron ore and bauxite, a long-awaited move that will significantly swell the annual revenue of states.

As per some estimates, annual revenue collection of mineral-bearing states could swell over 40 per cent to around Rs 15,000 crore.
The Cabinet proposal had sought to raise the royalty rate on iron ore and chromite to 15 per cent from 10 per cent now.
Besides, Chinese manufacturing activity fell to a three-month low in August, as per HSBC's manufacturing purchasing managers index. This also affected the sentiment and further contributed to the drop in steel makers' share prices.
"The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index (PMI) for the month of August came in at 50.3 this morning. This was lower than July's 51.7 reading. This should logically dampen the metals in our markets in India, which could also be under some pressure because of the increase in royalty payments to the states," said HDFC Securities in a morning note.