Mayank Bhardwaj, Reuters
New Delhi: India will not intervene to curb rising steel prices, which have inched up again in May, as they are in line with global markets, a senior steel ministry official said on Thursday.
Steel firms started increasing prices this month in line with global rates as profit margins came under pressure.
Some have raised prices of hot rolled coils by Rs600 ($14.62) to about Rs28,800 per tonne this month, an industry source told Reuters.
But Steel Secretary R.S. Pandey said there were no plans to cap prices: “Government is not in a regulatory role. The price monitoring committee will study the rise in steel prices.”
“Indian prices are in line with international trends,” he told reporters on the sidelines of an industry conference.
Shares of steel firms like Steel Authority of India Ltd, Tata Steel Ltd and JSW Steel Ltd were up by between 1.3% to 3.5% in a firm Mumbai market in early afternoon trade.
In March, Indian firms raised steel prices to keep pace with global spikes, but reversed their decision after pressure from the government to help fight inflation.
The annual inflation rate hit 6.69% on 27 January, its highest in more than two years, but has fallen below 6% as the central bank has tightened policy and the government cut duties on a range of items to rein in prices.
At least two steel makers, Essar Steel and Tata Steel, raised the price of hot rolled coils by Rs1,000 per tonne on 1 March.
Separately, Pandey said India firms should not stop exporting iron ore, as steel firms have demanded, as the present domestic steel-making capacity would be unable to soak up ore output.
“You should not stop exports. If domestic capacity of steel goes up, less iron ore should go out,” he said.
In April, industry representatives assured Finance Minister Palaniappan Chidambaram steel firms would more than double steel-making capacity to 85 million tonnes by 2010 and to 200 million tonnes by 2020.
Global players like South Korea’s POSCO are planning plants in India, where demand for steel is rising amid efforts to improve key infrastructure and sustain high economic growth rates.
Pandey said the government was keen to sort out problems facing the Korean firm, which wants to invest $12 billion in the eastern state of Orissa but whose plans have been hit by protests over land.
“POSCO is a major investor and we all take note of that. I believe that POSCO should start production by the end of 2010,” Pandey said.
The firm is facing stiff opposition from villagers over land acquisition and has so far been unable to secure a lease for a iron ore mine to feed the proposed steel mill.
— Additional reporting by Biman Mukherji