New Delhi: Indian steel firms may seek to raise prices when a self-imposed moratorium ends early next month, but the government is likely to oppose any hefty, inflation-fuelling increase.
Tata Steel Ltd’s managing director B. Muthuramanon Wednesday said Indian steel prices were ruling Rs15,000-20,000 a tonne below global rates at a time when rising input costs and freight rates were denting firms’ margins.
Price pressure: B. Muthuraman, managing director of Tata Steel.
“There is every justification for increasing prices because input prices have gone up,” Muthuraman said at a conference. He added the steel industry found itself in an “unnatural situation” which could hurt expansion plans.
In May, steel companies such as state-run Steel Authority of India Ltd (SAIL), Tata Steel, JSW Steel Ltd and others promised to hold prices for three months to help the government cool prices amid fast-rising inflation.
SAIL will review prices after the three-month period expires, its chairman, S.K. Roongta, said on Wednesday.
Despite the price pledge by larger steel firms, data from an official body, the joint plant committee, showed many product prices had risen by about 9% since mid-May. Steel minister Ram Vilas Paswan said smaller firms and middlemen were to blame.
“We won’t want steel producers to face losses because the steel industry is at its peak, but we will also safeguard consumer interest,” Paswan said, calling on firms to increase production.
He added that if firms hike prices in the near term, the government would be watching.
“If the media asks me why steel firms have increased prices, I will say raw material prices have gone up.”
“But if they again ask me why steel firms have raised prices by 5% when (input) costs have gone up by just 2%, then you will have to answer,” the minister said, pointing towards steel industry representatives.
Shares in Tata Steel reversed early gains to close at 3.3%, down Rs625.70, while SAIL lost 3.9% to close at Rs127.20 in a Mumbai market that ended down 0.8%.