Steel ministry refuses to ask NMDC to withdraw iron ore price hike

Steel ministry refuses to ask NMDC to withdraw iron ore price hike

New Delhi: Government has turned down the request of steel producers to persuade state-run miner NMDC Ltd to roll back last month’s price hike on iron ore, saying it cannot intervene in the commercial decision of the PSU.

“Pricing of iron ore of NMDC is purely a commercial decision of the PSU and we may not intervene in it," steel ministry has said in response to the joint representation of companies like Ispat, JSW, Essar and RINL.

Navratna PSU NMDC had late last month announced up to 40% provisional hike in iron ore prices for its long-term contracts in the domestic market with retrospective effect from 1 April this year.

Other than SAIL and Tata Steel, which have captive resources, major steel producers cumulatively procure about 26.5 million tonnes of iron ore annually from the Indian miner.

Already under pressure due to slump in demand for the alloy amid global financial crisis, the steel industry had sought intervention of the steel ministry and Prime Minister Manmohan Singh for roll back of the price hike on iron ore, a vital raw material for steel—making.

In the representation, the steel producers said the price hike by NMDC has come at a time when the industry is under immense pressure due to fall in demand of the commodity and cheaper imports from China, Ukraine and Thailand.

“Operations of domestic steel producers, which do not have captive resources and are reeling under high cost of production due to over 300% increase in prices of raw materials, will become inviable if input cost goes up any more," senior official of a steel company said.

Endorsing the industry’s concern on slump in demand for the alloy, the government yesterday scrapped the 15% export duty on long steel products, which are mainly used in construction sector.

In a meeting held in mid-October, steel producers had submitted a set of demands to Steel Minister Ram Vilas Paswan to protect the domestic industry.

The major demands included imposition of 15% import duty on steel to check cheaper imports flooding the Indian market.

Backing the industry’s concerns, the steel ministry has recommended imposition of 10% import duty on steel to the finance ministry. It has also favoured 14% countervailing duty on steel imports.

According to industry watchers, government is likely to take a decision on imposing import duty on steel by next week.