Govt wants steel prices to come down
Financial Express

The steel ministry is in favour of a downward revision of steel prices although it would first find out whether the price increase is justified or not. The ministry will hold a meeting with the steel manufacturers on February 15 to discuss this issue to take a final decision.

Steel minister Ram Vilas Paswan, who was in Kolkata on Friday, said the steel secretary has given the onus to find out whether the price hike is proportionate with the increased input costs.

“If it is found that the price rise is not proportionate to the hike in input cost, the ministry will mount pressure on the steel makers to lower prices,” Paswan said.

Steel prices have gone up by an average of Rs 2,000-2,500 per tonne across all categories and is further expected to go up by another 5-8% within this month.

Paswan said it was true that higher costs of coking coal and iron ore had impacted steel prices, and public sector steel makers also increased their prices. “The ministry can bring about an immediate conrol on steel prices of public sector units but that will have hardly any impact on the market as two third of the of it is dominated by the private steel makers, “ Paswan said. Controlling prices of PSU steel will only help middle men to gain more,” Paswan said.

Observers feel the government will be able to contain a further increase in the prices, but the Rs 2,000-a-tonne hike, first initiated by Rashtriya Ispat Nigam Ltd, followed by Tata Steel, SAIL and then other Companies, will not come down.

Paswan said while production was growing 7% in India, consumption was currently increasing at the rate of 12%.

Although the steel ministry has a revised capacity addition target of 85 million tonne by 2011-12 from its earlier 65 mt, the inter-ministerial group on steel has fixed a target of adding 100 mt capacity within the same period, the minister said.