Date:04/04/2008 URL: http://www.thehindubusinessline.com/2008/04/04/stories/2008040451660300.htm

Back Steel producers not inclined to cut prices on rising input costs

Our Bureau

New Delhi, April 3 Major steel producers today made it clear to the Government that they are not in a position to reduce prices of primary steel products (hot-rolled coil) because of steep hike in input costs during the past one year. They have also not made any commitment of not increasing prices in the near future.

However, in case of TMT bars, Tata Steel and RINL, whose products are priced higher than that of other companies, have agreed to cut prices by around Rs 2,000 per tonne with immediate effect and match the prices charged by the other companies.

Also, in the case of galvanised corrugated sheets, used as roofing material for low-cost housing, the companies have agreed to cut prices in the range of Rs 500-1,000 per tonne.

These decisions emerged from a meeting between the Ministry of Steel and steel majors here on Thursday.

The companies have also agreed to import an equivalent amount of steel that they will be exporting.

Briefing presspersons after the meeting, the Steel Secretary, Mr R.S. Pande, said that “there has been no assurance from the industry on whether they will hold, increase or reduce prices of hot rolled steel.”

But, he said, the companies have agreed to a number of initiatives aimed at increasing the availability of steel to small and medium enterprises including additional imports.

Small and medium enterprises currently get a transport subsidy of Rs 550 per tonne from the Joint Plant Committee (JPC) fund. The companies have agreed to provide an additional Rs 400 per tonne to the SMEs in the form of transport costs, Mr Pande said.

Though the exact modality is yet to be worked out, industry sources hinted that it may be passed on to the consumers in the form of a Rs 400 rebate per tonne while billing.

Also, for very small consumers whose annual consumption is in the range of three to four tonnes annually, the companies have agreed to provide door step delivery at their own cost, he said.

The steel companies pointed out that during the past one year production cost has increased by around Rs 15,000 per tonne while price has increased by around Rs 7,000 per tonne.