Steel companies asked to refrain from frequent price increases
The Hindu

Give importance to views of Price Monitoring Committee while deciding on prices: Paswan
The Centre on Wednesday asked steel producers to refrain from frequent price hikes and suggested that the views of the Price Monitoring Committee should be factored in while taking a decision on raising the prices of their products.
Addressing a seminar on steel and mining organised by the Indian Chamber of Commerce here, Steel Minister Ram Vilas Paswan said: “Stable pricing should be adopted by the steel producers. They should pay due importance to views of the Price Monitoring Committee while deciding on prices of their produce”.

Instead of hiking their product prices too often, the steel majors should decide their prices in tandem with the price fluctuations of iron ore and coke in the global markets. “My request to the steel industry will be to exercise restraint on any arbitrary price hike for steel products as it directly affects the common man,” he said.

On the issue of putting a cap on exports of iron ore, the Minister said: “My Ministry has always favoured that iron ore exports be allowed only after meeting the needs of the domestic steel makers to ensure value-addition within the country.” In this regard, he pointed out that while Tata Steel and state-owned steel major SAIL had captive mines, others producers such as JSW, Essar and Ispat did not, and this reflected a distortion in the country’s mineral policy. Mr Paswan assured the gathering that his Ministry would continue to work for implementation of the promised investments in the steel sector while noting that a high-level committee should be constituted for monitoring the progress. Concerned over the growing demand-supply mismatch in the steel sector, he stressed the need for higher production as the country would otherwise become dependent on imports.

Speaking on the occasion, Minister of State for Mines T. Subbarami Reddy said that the Government favoured the value-addition of iron ore at the country level instead of it being a state-specific activity.
In the national mineral policy under formulation, he said the Government had suggested that mineral-rich states should be given 18 months to decide on the fate of mining applications. An investment of about Rs 15,000 crore is envisaged once the policy is implemented, he said. Opposing Mr Paswan’s suggestion of capping ore export, Mr Reddy pointed out that the ceiling could jeopardise the mining industry and result in a massive loss of jobs. Alongside, he disfavoured ore exports by the state-owned NMDC and noted that it should provide raw material support to the domestic producers.

The Government, he said, should also take adequate steps to render the steel industry globally competitive.
In his address, SAIL Chairman S. K. Roongta noted that for the betterment of both the steel and mining sectors, the two industries should join hands instead of criticising each other.

Steel prices raised on the quiet
Business Standard

A day after Minister for Steel, Chemicals and Fertiliser Ram Vilas Paswan told Parliament that steel prices would come down by Rs 500 a tonne on account of the 2 percentage point reduction in Cenvat, makers of flat and long products quietly raised prices by Rs 1,500 to Rs 3,000 a tonne on March 4.
Producers have raised prices by Rs 1,500 to Rs 3,000 a tonne for long products, which are used in the construction industry.
For flat products, which go into consumer durables and automobiles, the increase is Rs 2,500 to Rs 3,000 a tonne.
The price increase kicks in with immediate effect and has been implemented by both public and private sector producers.
However, apart from Tata Steel, the world's sixth largest steel producer, and cold-rolled and galvanised steel maker Uttam Galva Steels [Get Quote], no producer is officially acknowledging the price rise.

"We were waiting for the meeting with the steel minister. Even though the agenda for the meeting was review of projects, we were expecting some directive on prices," said an industry source.
Paswan, however, told an Assocham meeting in Mumbai on Tuesday that his ministry would not intervene in pricing decisions owing to the strong criticism it has attracted on this account.
He, however, qualified the statement by saying that non-interference would hold if steel producers did not raise prices at a higher rate than the rise in input costs.

With this increase, the ruling price of TMT bars, a widely-used long product segment, now stands at Rs 43,000 a tonne and that of hot rolled coil (HRC) in flat products around Rs 42,000 a tonne.
Tuesday's price rise comes a month after steel producers partially rolled back prices in February at Paswan's behest. Prices had been raised by Rs 600 to Rs 900 a tonne in January and again by an average of Rs 2,500 a tonne in February on account of steep increases in raw material costs such as coking coal and iron ore. Producers were made to roll back prices by Rs 500 a tonne for TMT bars and rounds and Rs 1,000 a tonne for other products. Costs between April 2007 and January 2008 had increased by Rs 6,000 to Rs 7,000 per tonne.
Government-owned NMDC Ltd, the main domestic supplier of iron ore, raised prices 48 per cent in October and another increase of at least 65 per cent is expected in April, in line with the international iron ore prices. Most steel producers without captive mines source their iron ore from NMDC.
Spot coking coal prices between April and February have almost doubled and international companies are looking at a 40 to 50 per cent increase in prices from April 2008. Among the public sector steel producers, Steel Authority of India Ltd is covered 35 per cent for coking coal and 100 per cent for iron ore through captive sources.
Rashtriya Ispat Nigam Ltd, the other public sector producer, has no captive resources.

Steel companies seek export duty hike
Times of India, 06-03-08

Floods in Queensland would result in a shortage of 16-24 million tonnes of coking coal, brokerage Credit Suisse said in a report, adding India gets 80% of its supplies from the Australian state. While the government abolished import duties on scrap metal and increased export duty on chrome ore in the Budget to help local industry, it left export duties of Rs 300 per tonne on high grade iron ore and Rs 50 for low grades unchanged. Steel firms, worried about future supplies, have been lobbying for a hike in the export duty. "The issue of export duty on iron ore is still under examination in the government and will be further pursued," said Paswan, who expected domestic demand for steel to grow 14-16% in the next seven years.

"One of the determining factors is to see how the cost dynamics will move from April 1, particularly long-term coal prices and long-term iron ore prices in the domestic market," said MV Seshagiri Rao, JSW Steel’s director finance. Paswan assured that his ministry will continue to work for implementation of promised investments in the sector on the ground and pointed out that a high-level committee should be constituted for the purpose.

Minister of state for mines T Subbarami Reddy said the government has favoured national value-addition of iron ore instead of it being state-specific. In the coming national mineral policy, the government has suggested that mineral-rich states should be given 18 months’ time to decide on the fate of mining applications. The government has envisaged an investment of about Rs 15,000 crore once the said policy was implemented, he added. Reddy opposed capping ore export, saying it could jeopardise mining industry and lead to massive loss of employment. Simultaneously, he opposed state-run miner National Mineral Development Corporation’s export of ore saying it should instead try and extend raw material support to steel makers.

India calls for restraint as steel prices rise
Financial Express

Indian steel firms should show restraint when considering price rises, the steel minister said on Wednesday, as Tata Steel increased rates with state-run Steel Authority of India and others expected to follow.

Trade officials said rising costs of iron ore and coal in addition to strong demand are squeezing local steel firms. "My request to the steel industry will be to exercise restraint on any arbitrary price hike for the steel commodities," Minister Ram Vilas Paswan said. Tata Steel, the world's sixth-largest steelmaker, raised prices for the second time this year, increasing those of long products by Rs 1,500-2,000 a tonne, while flat products went up by Rs 2,500-3,000 per tonne.

JSW Steel, Bhushan Steel and Ispat Industries had also already increased steel prices this year. "One of the determining factors is to see how the cost dynamics will move from April 1, particularly long-term coal prices and long-term iron ore prices in the domestic market," said M V Seshagiri Rao, director of finance at JSW Steel said. Steel Authority of India Ltd is also considering a proposal to raise steel prices and a final decision is expected within a week, Chairman S K Roongta said. Unlisted Essar Steel may follow suit as costs have gone up by Rs 6,500-7,000 ($161-$174) a tonne since April on iron ore and gas, director of sales and marketing Vikram Amin said.

Floods in Queensland would result in a shortage of 16 million to 24 million tonnes of coking coal, brokerage Credit Suisse said in a report, adding India gets 80 per cent of its supplies from the Australian state. While the government abolished import duties on scrap metal and increased export duty on chrome ore in its budget on Friday to help local industry, it left export duties of Rs 300 per tonne on high grade iron ore and Rs 50 for low grades unchanged. Steel firms, worried about future supplies, have been lobbying for a hike in the export duty. "The issue of export duty on iron ore is still under examination in the government and will be further pursued," said Paswan, who expected local demand for steel to grow by 14-16 per cent in the next seven years.

Steel firms defy govt, hike prices
Times of India

Steel companies have decided to defy a government advisory against raising pricing, citing higher iron ore and fuel costs. After FM P Chidambaram’s decision to reduce the excise duty by 2 percentage points to 14%, it was expected that steel makers will cut the commodity’s price.

But as the global steel prices firmed up because of rise in the input costs, domestic steel makers like Tata Steel decided to raise the price by up to Rs 3,000 per tone. Even the steel minister ram Vilas Paswan’s appeal not to raise the price did not cut much ice.

Following Tata Steel, other steel makers, Essar Steel and SAIL could follow suit. "My request to the steel industry will be to exercise restraint on any arbitrary price hike for steel products as it directly affects the common man," Paswan said.

While suggesting that steel companies should give due attention to the views of the government’s price monitoring committee, Paswan said that instead of raising prices too often, manufacturers could decide their prices in tandem with the price fluctuations of iron ore and coke in the global market. JSW Steel, Bhushan Steel and Ispat Industries have already increased prices, while Tata Steel hiked, for a second time this year, prices on various products by Rs 1,500-3,000 a tonne. Essar Steel may follow suit as costs have gone up by Rs 6,500-7,000 a tonne since April on iron ore and gas, the company’s sales and marketing director Vikram Amin said.

Hold your price horses, PC tells industry
Economic Times

Finance minister P Chidambaram on Wednesday asked industry to hold the price line and refrain from exploiting temporary mismatches in demand and supply to rein in inflation. Pointing out the manufacturing sector’s the contribution to inflation, he asked sectors such as pharma, auto, paper, buses and others that have enjoyed deep fiscal cuts to hold prices. While being bullish on growth, the finance minister said he wanted to complete his innings with a batting average of 8.8% growth per year.

“There is a lesson for the manufacturing sector. You have to become more competitive and hold the price line,” Mr Chidambaram said during his post-Budget interaction with Ficci. He said the industry would hurt itself in the long run if it exploits short-term supply-demand mismatches.

The wholesale price-based inflation rose to nine-month high of 4.89% for the week ended February 16 from 4.35% in the previous week due to rising cost of petroleum products and some food items. Even though inflation is partly caused by rising food prices, the contribution of manufacturing sector is not insignificant, Mr Chidambaram said. When there are pressures brought on by growth and high commodity, oil and food prices world over coupled with a slowdown in consumption, industry should rise to the occasion and become more competitive and more efficient to hold the price line, he said. “I am extremely bullish on growth during 2008-09. Industry should rise to the demand by producing goods and services,” the finance minister said.

“Expand volume of production and gain in volume what you might lose by not increasing prices,” he said.

Ficci secretary general Amit Mitra, in response to FM’s suggestion, said, “All the sectors, including auto, pharma and paper, are price elastic and so it makes sense for manufacturers to pass on the benefit of excise duty reduction to consumers. Price reduction would lead to high sales volume. The auto sector has already cut prices and others may follow suit.”

Referring to oligopolistic tendencies in some industries as flagged off in his Budget speech, the finance minister said Monopolies & Restrictive Trade Practices Commission (MRTPC) has come out with two judgements on the cement industry, pointing out that the cement firms are acting like a cartel.

He said, “A year ago, when I tried to persuade the cement industry to reduce prices, they reacted with a sense of injured innocence. Since then, there have been two MRTPC decisions finding them guilty of cartelisation.”

Confident that 2008-09 would also witness high growth, Mr Chidambaram said, “I have said my batting average is 8.8% in four years. I have no intention to close my innings with a lower batting average.”

He said the Budget proposals to cut excise duties, specific Customs duty and central sales tax would make industry more competitive while income-tax measures and increase in government expenditure would spur demand. He said while exports have not been impacted in volume terms, their realisation has taken a hit due to the rising rupee.

Steel cos hike prices despite excise cut; Paswan angry
Indian Express

In the wake of reports of steel companies hiking prices despite a 2 per cent cut in excise duties in the budget, steel minister Ramvilas Paswan today launched a broadside against the industry asking them to be more transparent regarding pricing.
“There is a price-monitoring committee that has been instituted to review prices but there is a need to rein in prices and take the consumers into confidence whenever a hike occurs,” the minister said at a steel summit organised by Indian Chamber of Commerce. “When excise duties are cut and the benefit is not passed on to the consumers then a case for further reduction gets weakened.”
Paswan’s tirade comes days after the industry had rolled back prices at the behest of Steel Ministry only to hike it again today. Some steel producers led by Tata Steel have hiked spot prices between Rs 1500 and Rs 3000 for various products. Essar, Ispat Industries Ltd and

Jindal South West are also reported to have effected a price hike on their products while state owned Steel Authority of India Ltd (SAIL) is deliberating doing the same.
“We are monitoring global prices and would take a decision on whether to increase price or not within a week’s time,” said SAIL chairman S K Roongta.
Paswan pointed out that the steelmakers should increase prices in tandem with the global increase in raw material prices. “There should be an analysis of the extent of price increase of raw materials like coking coal and iron ore and the ratio in which steel prices can be increased,” he said. “Steel as a commodity affects the common man and acts as an inflationary agent.”
Last month Paswan had intervened after steel companies increased prices and requested them to refrain from doing so. The companies had ‘voluntarily’ agreed to do the same but the ministry had received flak for trying to regulate prices.