Paswan warns steel retail manipulators, giants want price revision


New Delhi : The government will take action against manipulators in retail steel trade, Steel Minister Ram Vilas Paswan warned here Wednesday, while industry giants said they would review product price some time next month.

Support TwoCircles

Paswan, who accused dealers of selling steel products at prices higher than market rates, said steel companies were free to revise prices, but in a rational manner.

“The government does not fix prices for steel products, and we do not want industry players to suffer in terms of profit at all. How much profit they should earn is the issue the company must look into before taking any decision,” Paswan said at an industry conclave here.

“If there is an increase in the raw material prices, they must revise steel prices,” Paswan told reporters on the sidelines of the “Indian Steel Conclave-2008” organised by the Federation of Indian Chambers of Commerce and Industry (Ficci), an industry lobby.

Pawan hoped that by 2012, India would have an estimated steel production capacity of 124 million tonnes against the current level of 59 million tonnes.

“Certain dealers and traders have sold the flat steel products at higher than market price, taking advantage of the high demand in the retail market,” Paswan said in his addressing at the conclave.

“We will take up very severely with such market manipulation. We have already directed the public sector undertaking steel companies to keep a strict watch on such malpractice,” he said.

The heads of steel giants, however, said they would revise price only after the voluntary moratorium on steel prices ends August 7.

“We will take a fresh look at the price situation only after the voluntary moratorium on the steel prices ends next month,” chairman of the state-owned Steel Authority of India (SAIL), S.K. Roongta, told reporters.

Echoing a similar view, Tata Steel’s managing director B. Muthuraman said steel manufacturers could not go for capacity building at current profit margins.

“The industry cannot go for capacity expansion at the current rate of margins. There is every justification to increase steel prices,” Muthuraman said.

In reply to a question, he said steel in India was being sold Rs.15,000 to Rs.20,000 cheaper per tonne than the global market though input costs had gone up.

Steel manufacturers at a meeting with Prime Minister Manmohan Singh May 7 agreed to reduce prices of flat steel products by Rs.4,000 a tonne and by Rs.2,000 per tonne in the case of structural steel, and not to revise prices for the next three months.

Earlier in his address, Muthuraman wanted to know whether the benefit of reduction in steel prices was reflecting in the final prices, most critical for consumers.

“If the price of steel is low, its benefit should pass on to the consumer. Is it really happening?” Muthuraman asked while underlining the need for a long-term strategy to develop India’s steel capacity further.

“Rising inflation and inclusive growth are among the factors affecting growth of the domestic steel industry,” said Sushim Banerjee, SAIL’s executive director (commercial).

Added Essar Steel Holdings director for global sales and marketing Vikram Amin: “There is a need to have improved availability of iron ore, ferro alloys and energy to boost the Indian steel industry.”

“While negotiated quasi-administering of steel prices may work in the short run, let’s be clear that this is clearly a very unhealthy and unsustainable trend for any growth industry which requires substantial forward-looking investments,” said Ficci president Rajeev Chandrasekhar.

“The only sustainable way of ensuring low prices, he said, was to develop increased supply and capacity at the lowest possible costs and in the most efficient manner,” he said.

Steel secretary R.S. Pandey said although steel prices had gone up by about 30 percent in the last four months, the increase was much less than the global prices.

“The efforts of the government in the recent past had resulted in giving a cost advantage of Rs.2,000 per tonne to the steel industry. The priority today is expansion of steel production capacity, and ensuring land availability and mineral linkages,” said Pandey.