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Thursday, May 08, 2008
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Steel producers to roll back prices

Special Correspondent

Move follows meeting between the industry delegation and the Prime Minister

— PHOTO: KAMAL NARANG

SHARING CONCERN: (from left) Sajjan Jindal, Vice-Chairman and Managing Director, JSW Steel; S. K. Roongta, Chairman and Managing Director, SAIL; and B. Muthuraman, Managing Director, Tata Steel briefing the media after a meeting with the Prime Minister on steel prices in New Delhi on Wednesday.

NEW DELHI: Leading primary steel producers on Wednesday conceded that the surge in steel prices was fuelling the inflationary spiral and volunteered to roll back prices of flat products by Rs. 4,000 a tonne while reducing the prices of reinforcement bars and structurals by Rs. 2,000 a tonne.

On its part, the Government has also assured steelmakers that the notification on export duty on steel, which was announced by Finance Minister P. Chidambaram as a measure to tame inflation by facilitating higher domestic supplies, would be put on hold.

The decision to cut prices was the outcome of a meeting that a delegation of steel industry magnates had with Steel Secretary R. S. Pandey, followed by a meeting with Prime Minister Manmohan Singh later during the day. Finance Minister P. Chidambaram, Steel Minister Ram Vilas Paswan and Cabinet Secretary K. M. Chandrasekhar also participated in the meeting with Dr. Singh.

Emerging from the meeting with the Steel Secretary, Chairman of state-owned SAIL Sushil Kumar Roongta said: “We endorse the Government’s concern on steel prices contributing to inflation. Major steel producers have decided to reduce prices of flat products by Rs. 6,000 per tonne and prices of rebars and structural steel by Rs. 2,000 a tonne and hold these prices for [the] next three months.”

The reduction in the prices of flat products, Mr Roongta clarified, would be effected by all producers who had raised prices last month while the prices of rebars and structurals were being cut despite the fact that their prices were not hiked earlier. The price cut, however, would not be applicable on exports or negotiated prices of steel products.

Later, at their meeting with the Prime Minister, the steel industry honchos apprised Dr. Singh of the problems being faced by the sector by way of the various fiscal measures announced in recent weeks and also sought relaxation in the ceiling on external commercial borrowings (ECBs) as funds through this route were required for financing their expansion plans and retirement of high-cost debts.

The Prime Minister gave a patient hearing and assured a look-in into the various issues. “We met Prime Minister Manmohan Singh and shared our concerns. We apprised him that prices of raw materials have shot up high, leading to increase in cost of production... He would look into the issues raised by us,” Mr. Roongta said.

Ad valorem duty

The industry also sought an ad valorem export duty of 15 per cent on iron ore so as to conserve the mineral for steel production and meeting the basic raw material needs for expansion in capacities.

“We have also requested the Prime Minister to ask mineral giants NMDC and Manganese Ore India Limited (MOIL) to reduce their prices which are crucial inputs for steel making and that these PSUs should accord priority to domestic producers for supplying their produce before undertaking exports and charge long-term international prices,” Tata Steel Managing Director B. Muthuraman said.

Allocation of iron ore

In this regard, the industry noted that the procedure of auctioning of manganese ore and iron ore by MOIL and NMDC should be stopped as it was leading to speculative pricing in the domestic market. It was also suggested that to facilitate investment in the steel sector, the allocation and renewal of iron ore and coal mines should be ensured on a priority basis. Dr Singh was also requested to consider appropriate reduction in excise duty on steel with the industry holding out an assurance that the benefit would be passed on to the consumers. Apart from Mr. Roongta, Mr. Muthuraman and Mr. Mittal, others in the delegation that met the Prime Minister were JSW Steel Vice Chairman and Managing Director Sajjan Jindal and Essar Steel chief Shashi Ruia.

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