New Delhi: Eight major steel producers on Thursday agreed to bring down prices of several grades of steel, including those used in construction. In a pre-election gift, they also lowered prices on roofing sheets used in low-cost homes.
Tata Steel Ltd and Rashtriya Ispat Nigam Ltd are among the producers who pledged reductions on wire rods used in buildings by Rs2,000 a tonne. Almost all producers, including Steel Authority of India Ltd, Essar Steel Ltd, Ispat Industries Ltd, Bhushan Power and Steel Ltd, JSW Ltd and Jindal Steel and Power Ltd, decided together to roll back prices of roofing material between Rs500 and Rs1,000 a tonne.
In a battle to curb inflation, which saw a 4.4% spike in metal prices in the wholesale price index for the week ended 15 March, the government has been holding back-to-back meetings to contain prices. It has asked miners and different steel makers through this week to suppress rising costs and, is looking at a range of measures such as withdrawing export benefits, increasing imports and removing customs duty to enhance supply at home.
Last week, the government removed the benefits given to steel firms for exporting value-added steel after importing the raw material.
The firms also agreed to lower prices at a meeting with steel secretary R.S. Pandey, who said while the Centre has no control on prices, the companies have “to hold the prices to the extent it’s possible”.
This marks the second time in as many months that the steel industry is being exhorted to lower prices; a previous promise, made before the budget in exchange for the cutting of excise duty, was only partially fulfilled.
Secondary steel producers, also called cold-rolled makers, who prepare flat sheet for further manufacturing, have agreed to import their raw material, which the hot-rolled big steel makers produce—a measure to raise supply. “Those who export cold-rolled coiled and colour-coated steel will import the raw material,” said Pandey.
The producers agreed to extend benefits to the small steel producers through state agencies by making 20% more allocation at 6,00,000 tonnes. They gave an additional transportation subsidy of Rs400 a tonne over the Rs550 a tonne it already gets. The contract will be for three months, said Pandey.
The government has also asked iron ore miners to stem prices, and the latter have agreed to discuss the same with steel companies.
While prices of raw material soar, construction steel prices have shot up by more than a quarter in a year, according to government data.
Apart from rising costs such as iron ore and coking coal, the steel sector has to now deal with higher transportation costs due to higher oil prices and a hike in rail freight on iron ore this week — up from Rs1.8 per km per tonne to Rs3 per km per tonne.