Steel Authority of India Ltd (SAIL) and other Indian steel makers agreed to lower prices for a second time since April to help the government cool inflation that’s at its highest in more than three years.
Companies will cut prices by up to Rs4,000 a tonne, S.K. Roongta, chairman of SAIL, the nation’s second biggest producer, told reporters in New Delhi after producers met Prime Minister Manmohan Singh. Bars and rods will become cheaper by Rs2,000 a tonne.
Price-conscious: SAIL chairma S.K. Roongta.
The government persuaded steel makers last month to hold product-prices for four months to help combat inflation. Profit margin may narrow “substantially” this year if companies can’t pass on record iron ore and coal costs, Sajjan Jindal, managing director of JSW Steel Ltd, the third biggest, said this week.
Prices won’t change for three months, Roongta said.
Rio Tinto Plc. and BHP Billiton Ltd, the world’s second and third largest iron ore suppliers, are seeking a freight premium from Asian steel makers, which have agreed to pay Brazil’s Cia Vale do Rio Doce as much as 71% more for contracts started 1 April. Prices of coking coal have tripled to a record.
Indian steel makers may agree to cut prices if the government imposes a tax on iron ore exports, bolsters supplies of coal and ends a planned tax on exports, said two executives who attended a meeting with steel secretary R.S. Pandey earlier on Wednesday.
Sesa Goa Ltd, India’s biggest non-state-owned exporter of iron ore, declined 5.32% to close at Rs3,992.70 on the Bombay Stock Exchange. SAIL fell 3.31% to Rs173.55. JSW Steel closed little changed at Rs877.65.
The price cut was announced after stock markets closed.
B. Muthuraman, managing director of Tata Steel Ltd, the country’s biggest steel maker, JSW Steel’s Jindal and Shashi Ruia, chairman of Essar Steel Ltd, the fourth biggest producer, were among chief executives who met the Prime Minister.
Finance minister P. Chidambaram, steel minister Ram Vilas Paswan and cabinet secretary K.M. Chandrasekhar were also present at the meeting.
“We met Prime Minister Manmohan Singh and shared our concerns. We apprised him that prices of raw materials have shot up very high leading to increase in cost of production... He would look into the issues raised by us,” Roongta said.
Ispat Industries Ltd vice-chairman and managing director Vinod Mittal said the government has assured them of putting on hold the notification for implementing the export duty on steel.
‘PTI’ contributed to this story.