NEW DELHI: The government may put pressure on steel companies to limit price hike as it fears a major revision could add to the inflationary
pressure, but the industry is not happy with the attempt to regulate prices.
The steel ministry has called a meeting of all the major primary and secondary steel producers this week to preclude abnormal increase in the price of the metal that is a key input of many industries. “The aim is to ask companies to refrain from making abnormal profits and build moral pressure on them not to increase steel prices beyond a point,” steel secretary Atul Chaturvedi told ET.
The wholesale price index based inflation was almost into double digits in March, a 17-month high of 9.9%. Policymakers expect high inflation to persist in coming months on the back of rising commodity and fuel prices.
The government has, however, said it will not ask for a roll back of prices. “We have to recognise that raw material (iron ore and coking coal) prices are high that is also putting pressure ion companies to revise steel prices upwards,” Mr Chaturvedi said adding that domestic steel prices were still lower than international prices.
The meeting will particularly focus on price rise in long steel products such as TMT bars and corrugated sheets (used for roofing). These products are used by the housing sector and any price rise here directly impacts household and the construction sector. Steel prices started increasing from the second half of 2009 and trend is continuing even now. Top Indian steelmakers including Sail, Tata Steel, JSW and Essar have hiked steel prices (bench mark hot rolled coil prices) by up to Rs 3,000/tonne, effective April 1.
The metal prices are expected to move up further due to rise in raw material prices which constitutes over 40% of the final cost of steel prices are currently ruling at Rs 35,000-38,000/tonne in the domestic spot market, below the Rs 48,000-50,000/tonne they touched in 2008.
The then steel minister Ram Vilas Paswan had in May 2008 steel companies to agree for a price cut and had also managed to get them to agree to a moratorium on prices for a period of three months. The government had also taken several fiscal measures to improve availability of steel in the domestic market at lower prices. A repeat looks very likely. “The concern now is that steel price rise is happening simultaneously with a pick up in overall inflation
