The Mohali Industries Association (MIA) is apprehensive that the unbridled increase in the steel prices in the last 3-4 months has put the industry in a piquant situation.
The association says that the rising steel prices have broken the back of SSIs. It alleged that the steel manufacturers have formed a cartel and are resorting to unjustified price increases.
The profits of the steel companies are apparently booming. SAIL has declared 32% increase in profit for the quarter ended December 2007, says the association.
The association states that with the increase in steel prices, it has become impossible to service orders in hand, both domestic and international, because at the time of booking orders steel prices were lower. The industry is therefore, unable to meet its obligations, bringing bad name and resulting in blacklisting of companies. Hundred of units are being forced to close down rendering lakhs of workers jobless.
Anurag Aggarwal, general secretary, MIA, said that in view of the skyrocketing steel prices, it had now become impossible to book fresh orders. Moreover, the instability in the market is making things uneasy and future business planning has come to standstill which is again forcing the units to shut shop,” he said.
He said SSIs supplying to OEMs are also under great pressure as it is becoming more and more difficult to cope up with the increase in raw material prices. The prices are settled with the OEMs on long term basis and they do not entertain any requests for frequent price increase. As a result the SSIs are incurring erosion of capital and huge financial loss.
Mr Aggarwal urged the government to immediately ban exports of raw materials to other countries.”By exporting cheap raw material to other countries we are not being able to compete in the international market. It seems that we are back to British Raj where raw material was exported from India and furnished good brought back,” lamented Mr Aggarwal.
The association demanded that customs duty on import of scrap be reduced so that scrap can be easily available. Further, due to levy of entry tax in Punjab, arrival of scrap has decreased to very low level. It has created shortage of material leading to price rise.
The Punjab government should take steps so that there is no harassment on import of scrap from other states, he said.
He also called for intervention of steel ministry to regulate the steel prices and direction to steel manufacturers so that they can increase the prices only once to twice a year to bring stability in the market.
He said the price of steel had increased by Rs 1,500 on January 1 last and again by Rs 3,000 per tonne on Friday last.