New Delhi: Ruling out any price band, the government today said domestic steel prices should come down following the softening global trend.
“We do not fix steel prices, and do not favour any price mechanism for the same. The government would like to play a facilitatory role,” Steel Secretary P K Rastogi said on the sidelines of CII Steel Tube summit adding the domestic steel prices should further come down on the falling global trend.
However, he said fiscal measures were taken few months back when export duties were levied on steel products to increase its availability in the domestic market.
He also said miners have agreed for a long-term contract for supplying iron ore to steel companies but the talks between the two parties have not concluded yet.
“They (iron ore producers) have agreed for a long-term agreement. The government had held talks between the miners and steel producers and will be meeting again. The talks are still on,” he added.
The government is for a long-term arrangement between miners and steel producers so that iron ore is supplied at a reasonable price, so that the price of the final product comes down, he said.
Moreover, Rastogi said there is a need to import over three million tonnes of steel to meet the rising demand.
“In the present fiscal, steel demand has grown by 12%, but the production grew only by 6%. There is a demand-supply gap of 6 per cent which needs to be fulfilled by imports,” he said.
At present, the domestic steel production is about 55 million tonnes.
The steel ministry has proposed a 5% hike in export duty of iron ore - from 15% at present to 20%, he said and added talks on the matter are on.
Industry chamber Assocham last month on behalf of domestic steel firms had demanded a duty hike to 35% to help increase domestic supplies and lower prices.
Many steel producers have recently cut the prices of their products by up to Rs2,000 per tonne on softening global trend.
Domestic steel manufacturers have not increased by prices of their products since 7 May, helping the government to check the rising inflation which touched 12.1 for the week ended 30 August.
Ministries of steel and mines had arranged for a meeting between steel companies and miners aimed at having long-term contracts at reasonable prices to ensure supply security and check price fluctuations.
Global steel prices have declined due to the dip in its demand, especially from the construction sector. In Middle East, construction activities have come to a virtual standstill due to the ongoing holy month of ‘Ramadan.´
Also in China, blast furnaces which were shut during the recently-concluded Olympics on environmental grounds resumed operations, increasing steel production.
Steel Minister Ram Vilas Paswan on successive occasions has said that there is a case for further downward revision in steel prices due to softening trend in the international market.
The steel companies have been complaining about their expansion plans being hit due to rising input costs which has eaten into their margins.