The Hindu : Business : Indian steel prices unlikely to go up

Online edition of India's National Newspaper
Wednesday, Jun 02, 2004

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Business

Indian steel prices unlikely to go up

By Our Staff Reporter

NEW DELHI, JUNE 1. Foreseeing no further increase in steel prices in view of the softening global prices, the Indian Steel Alliance (ISA), an association of five hot-rolled steel coil producers, today asked the Government not to regulate prices and allow free market forces to prevail. The ISA has also demanded `reasonable levels of protection' from the Government to the domestic steel industry.

Addressing presspersons here, the ISA Chairman, J. J. Irani, said in the past few months, steel prices had stabilised in the West as well as in China where the demand had come down. And if this trend continued, it was unlikely that prices would go up in India. He, however, said the Government should not interfere with the price mechanism. Significantly, in February, the previous NDA Government was assured by the ISA not to increase prices till June.

Stating that the Government must take immediate steps to ensure that the Indian steel industry remains viable and globally competitive, Mr. Irani said, "The steel industry, which installed capacity of 35 million tonnes, has just emerged from a bad cycle and is beginning to get back on its feet. We must take necessary steps to ensure that the industry continues to remain healthy in the long run. We need massive investments in the next few years to augment our capacity. Unless the Government comes out with some concrete plans, we cannot hope to be ahead in the race.''

According to the ISA President, Moosa Raza, the import duty on steel was reduced from 25 per cent to 20 per cent and had been further lowered to 15 per cent thus encouraging cheap imports on the cost of domestic steel industry. Moreover, the Government had suspended DEPB (duty entitlement passbook) benefits on export of hot rolled steel. The combined effect of this had practically abolished any meaningful protection. "Similarly, availability and prices of raw materials are a major concern for us. Policies that contribute to development of raw material resources within the country should be initiated besides providing relief on import of raw materials. Infrastructure support like roads, ports and rail links need to be strengthened while concessions on basic input costs like power and transportation should also be given,'' he added.

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