New Delhi: Bowing to pressure from the government, producers of steel tubes and pipes on Thursday agreed to reduce price by 10% with effect from Thursday.
Retail price of steel tubes and pipes are expected to come down to Rs48,000 per tonne from the current Rs53,000. The price had shot up in June despite a three- month price freeze announced by steel producers in May.
The producers agreed to cut the price at a meeting with steel secretary R.S. Pandey.
Feeling the heat: A file photo of Jindal steel plant in Haryana. Primary producers have said they would reduce exports to contain prices. (Photo: Rajeev Dabral/Mint)
The government has been putting pressure on the companies as part of its efforts to control inflation, which has accelerated to 11.42% for the week ended 14 June.
Primary steel producers such as Steel Authority of India Ltd and JSW Steel Ltd assured the government that they would contain prices by reducing exports. Primary producers manufacture hot-rolled coils, the basic ingredient for the rest of the industry.
According to industry estimates, retail sales account for only 5% of the total production of primary manufacturers.
A Mumbai-based analyst, who did not want to be named, said since the pipes and tubes category “had very small volumes”, the price cut will have very “limited impact”. “The government has to show that it is doing something... I think prices will continue to hold in sectors that are big consumers of steel, like construction and automobiles,” he said.
Industry leaders, meanwhile, sought to allay fears of a possible price revision in August, when the three month price freeze expires. “It is not necessary that we will increase the prices in August. We will make that call later. For now, we will try to reduce exports, which should provide an additional 5 million tonnes of hot rolled coils for the domestic industry,” said Sajjan Jindal, managing director, JSW Steel Ltd. He added that the industry would, within a week, come out with a “maximum retail price (MRP)” at which dealers should sell at the retail level. “We will advertise and advise the small consumers to avoid paying more than the MRP.”