Prices of flat steels in particular dropped by more than seven per cent in the last six months. Plates turned 7.5 per cent cheaper since June. Long products, like mild steel angles, were closely behind, shedding more than six per cent of their market value in the last six months. Ingots, or steel semis, turned 4.3 per cent cheaper since June, but that was only because ingot prices picked up last month, after having dropped by 9.32 per cent during the previous five months.

The Union Budget in June brought a four per cent countervailing duty, intended to reduce the difference between low international prices and the domestic rates of steel. In November came the long-awaited anti-dumping duty on hot rolled products imported from some CIS countries. December brought a steep floor price, first for "seconds" and "defectives"imports and subsequently, for prime steel imports, to keep under-valued steel away from the Indian shores.

The many-pronged policy measures were not intended to curb imports, but to check cut-throat competition from overseas producers. Throw-away import prices was considered greatly responsible for the low rates at home. Prices of most grades of steel, especially flat steels, is influenced by the landed cost of similar materials, prompting the mandarins of "mantralays" to fence with import prices.

A quick scan of statistics now reveals that the import price checks had actually brought imports down by nearly three million tonne, but had little or no impact on steel prices prevailing at home. Between April and November this year, steel imports plunged to 7.8 million tonne, from 10.84 million tonne during the same period last year.

Prices of flat steel products, which are now controlled by a floor price for imports, dropped drastically during the period. Flat steels turned cheaper by Rs 1000 since June atthe steel "mandis" (marts) around the country. The market price of flats dropped to Rs 12,700 a tonne on Christmas eve, from Rs 13,700 a tonne on June 25 and Rs 13,000 a tonne on November 25.

Plates made by the Jindals turned more than 11 per cent cheaper during the period. The fine-gauge Jindal plates usually command a premium in the market and had cost Rs 17,500 a tonne in June, when SAIL and Tata Steel plates (of thicker gauges) fetched a price of Rs 15,900 a tonne. By November the Jindal plates were selling for Rs 15,500 a tonne, barely Rs 100 more than the price Tata and Bokaro (SAIL) plates commanded in the market. On December 24 the price of the Jindal plates remained the same, but prices of Bokaro and Tata Steel plates dropped to Rs 14,700 a tonne. The prices of Essar plates (of the same specifications as the Jindal product) dropped to Rs 15,800 a tonne on November 25, from Rs 17,000 a tonne in June and now fetches a price of Rs 15500 a tonne.

Market watchers say import price checks alone will notpush up domestic prices, since there was enough steel in the home market to create competition among the Indian steel-makers. Import prices could only influence home prices if a cartel emerged at home. Steel-makers are unlikely to consult each other on prices, as long as inventories and so, the pressure to sell steel, remains high. The good news is that inventories with steel makers have dropped considerably since the beginning of the fiscal. Unsold stocks with steel companies fell by nearly two million tonne to 15.23 million tonne at the end of November from 17.81 million tonne on April 1, this year.

Steel production also decreased by two million tonne. All the steel mills in the country together produced 148.48 million tonne between April and November this year, compared to 150.70 million tonne in the first five months of the 1997-98 fiscal. Imports dropped by three million tonne during the period and exports remained more or less the same at 11.25 million tonne. The net result was an almost tight-fitmatch between the demand and availability of steel at home.

Actually the drop in imports created a three million tonne gap between the apparent consumption of 148 million tonne of steel and the domestic availability of 145 million tonne. Should the hiatus between the steel supplies and consumption grow a little wider, prices will have a better chance of turning firm. Till then, steel-makers will have to pray that the demand gets a boost from higher industrial production and a take-off in the steel-intensive infrastructure projects.