Ajoy K Das

Kolkata: Steel producers have agreed to lower prices for the second time since April to help the government in its fight against inflation, which is at its highest in more than three years.

S K Roongta, chairman of Steel Authority of India Ltd told reporters in New Delhi after a meeting with Prime Minister Manmohan Singh the prices of hot rolled coils will come down by as much as Rs 4,000 a tonne.

Bars and rods will become cheaper by Rs 2,000 per tonne.

The new prices won’t change for three months, Roongta said.

Tata Steel managing director B Muthuraman, JSW Steel vicechairman and managing director Sajjan Jindal and Essar Steel chairman Shashi Ruia were among those who met the prime minister.

The announced came after the stock markets closed. Just last month, SAIL had cut prices of certain construction grade products by Rs 2,000 per tonne and that of galvanised steel by Rs 1,000 per tonne.

Industry sources said the producers’ decision to cut prices again is aimed at soothing the government’s ire over rising steel prices. Prices of HR coils have spurted 51% over the past one year, contributing about 20% on a weighted average basis to inflation.

Pressure from the government to bring down prices of the commodity was thus mounting on the producers, with the prime minister suggesting last month that the industry should “forego short-term gains and not seek windfall gains from global prices in view of public interest.”

In fact, industry body Indian Steel Alliance (ISA) has just been disbanded in the face of investigations started by the Competition Commission of India on cartelisation.

ISA had been in the forefront of opposing the government’s move to levy export tax and countering charges of cartelisation.

However, the industry body had already been split by the conflicting interests of members who had no captive source of raw materials and those that had some and were that much insulated from rising input costs. Also several members did not agree with the strategy of going into direct confrontation with the government.

Eventually, the top two producers, Tata Steel and SAIL, pulled out of the body and the rest had little choice but to disband it.

All the same, the price cuts are bound to pinch the bottomlines of steel producers who have been seeking a tax on iron ore exports and bolstering supplies of coal in the country to bring down input costs.

Earlier this week, Jindal had said the steelmakers’ profit margin may narrow ``substantially’’ this year if they can’t pass on record iron ore and coal costs.

With inputs from Bloomberg

Source : DNA