Steel is willing to do a rollback

NEW DELHI: Within four days of announcing a price hike, steel manufacturers decided to roll back the hike after a meeting with steel secretary RS Pandey. A similar initiative by industry secretary Ajay Dua, where the cement industry was asked to help rein in inflation, did not yield any result.

Price hikes on galvanised corrugated steel and TMT bars have been reversed in full, while those on HR coils has been rolled back by 50%. This translates into a rollback of Rs 300-500 a tonne on corrugated steel, Rs 300-700 on TMT bars and Rs 500 on HR coils.

Corrugated steel and TMT bars are largely used by the construction industry while manufacturers of other products like automobiles use HR coils.  The steel ministry pointed out that the hike announced on March 1 was a routine activity that is done on the first of every month.

This  is based on domestic and international market situations, it said.

“However, considering the concern of the government regarding inflationary trend in the economy, steel producers agreed to roll back the increases announced on March 1, 2007,” said the statement.

HR coil prices were lower than prevailing international prices even after the hike, which ranged from Rs 500-Rs 1,000 a tonne. HR coils would roughly cost in the range of Rs 27,000 a tonne after the rollback.

Addressing reporters after the meeting, Pandey said, “The government had no intention of entering a controlled regime.” Representatives of Tata Steel, Steel Authority of India Ltd, Essar Steel, Ispat group and JSW Steel attended the meeting.

Pandey also said the government would soon come out with a steel quality notification, which is, at present, with the consumer affairs ministry.

Steel minister Ram Vilas Paswan said, “The sector is decontrolled. The government has no control except that we try to monitor prices.” He ruled out any move to regulate steel prices.

After a setback in two state assembly elections, the UPA government is worried about price rise, especially as the country’s biggest state Uttar Pradesh is going to polls shortly.

“Inflation is a concern. Cement and steel are core industries, and in the last one year, price hike has been significant,” said Shashanka Bhide, senior fellow, National Council of Applied Economic Research (NCAER).

On whether the government should resort to intervention in an industry that had market-driven prices, Bhide said, “It is an attempt to hold prices back. If banning of forward trading is an instrument, then intervention like this is also one instrument.”

Cement prices have climbed 30% since April 2006, while hot-rolled steel, a benchmark grade, is 25% higher from a year earlier.

On the impact of rollback on SAIL, chairman S K Roongta said there would be no impact on fourth-quarter results, since it was only a rollback of last week’s hike.

He said the increase in prices of HR coil over the last one year should be seen in the context that there was a fall in prices the previous year. He said the average realisation on the product for his company increased by Rs 3,000 over 2005-06.