Steel cos agree to slash prices if duty is lowered
THE battle over rising steel prices today took a new turn with the steelmakers extending an olive branch to the government saying they will reduce prices provided excise duty on the alloy was brought down to a reasonable level and the same will be passed on to consumers. “We are also sensitive to pricing issue. We suggest that the government should lower excise duty on the alloy to about 6 per cent from the current 12 per cent and we will duly reduce prices and pass it on to the consumers,” Indian Steel Alliance president (ISA) Moosa Raza said. The ISA, which is an umbrella organisation of major steel producers, have recently written to prime minister Manmohan Singh opposing steel minister Ram Vilas Paswan’s suggestion of setting up a regulator in the sector, which among other things would routinely monitor steel prices. “We are even open to the government mandating us to reduce prices in the eventuality of excise duty being reduced. But the government will also have to simultaneously address the contentious issue of rising iron ore prices and allocating captive ore mines to the steel producers,” Mr Raza pointed out. He pointed out that prices have been increasing due to unprecedented rise in input costs and cited that prices of iron ore have risen by 2.5 per cent to about Rs 13,000 per tonne, coking coal by 3.2 times, natural gas by 3 times and that of thermal coal by as many times since April 2007. “The government will have to contain the galloping exports of iron ore, which is projected at 105 million tonnes this year, up by 13 per cent, as compared to last year. We are not seeking an outright ban on exports, but are suggesting that exports be tapered off in tandem with the growth of the domestic steel industry,” Mr Raza said. Meanwhile, the Alliance today put out an advertisement in almost all leading dailies justifying the recent hike in steel prices, wherein it contended that Indian steel industry is linked to pricing trends prevailing in global utilities and domestic producers could not remain oblivious to it. “While steel manufacturers shared the government’s concern about current price situation..any attempt to regulate market forces operating on steel prices disregarding root causes is a retrograde step and will adversely affect growth of the industry,” Mr Raza pointed out in his letter to the prime minister.