New Delhi: With the price of steel coming off by nearly 30% in the international markets, the government is considering asking steel manufacturers to cut steel prices in the domestic market again. However, steel manufacturers say that even with steel prices cooling off in the international markets, the Indian prices are still substantially higher.
“International prices of steel have come off but they are still higher than Indian prices. The argument for cutting steel prices in India stands only if domestic prices of steel become lower than the international market,” says S.K. Roongta, chairman Sail.
At present, the steel prices in India are lower by $200 to $250 than the global steel prices. In July, this difference was higher at between $300 and $350. At that point, the global prices of steel stood in the $1000-1100 range while the prices in India stood at $700-850. Now, with international steel prices coming off by $100-150, the gap has narrowed.
The government has its own reasons for wanting to cut the steel prices. Inflation for the week ended 9 August stood at 12.63%. This is the highest it has ever been in 16 years. Iron ore and steel have been identified as major contributors to this rise. Not surprisingly, the steel sector has been attracting the government’s attention. It has been asked to cut its margins and profit. Steel companies were asked to hold prices in May this year and despite rising input costs, the steel manufacturers agreed to hold their prices and not effect a price rise.
Now, says the government, that they should be able to cut prices further. P.K. Rastogi, secretary, ministry of steel says, “International steel prices are softening. If the scenario persists, steel prices in India too will come down as steel producers will have to cut prices.”
On its part, the government is trying to find solutions to higher input costs. It has arranged for a meeting between domestic iron ore and steel producers to find a long-term solution for higher iron ore prices.