Dumping, steel companies said, has not only forced steel companies to put off planned price increases but has also led to drop in HRC prices. This has further led to lower sales realisation, and all steel companies are expected to end up in the red in 1998-99.

The HRC producers say the proposed HRC price hikes are only around Rs 1,500 per tonne (to the $245-250 per tonne levels), and essentially represent a correction following the sharp drop in prices over the previous 6-8 months.

"Following the price hikes, HRC prices will reach the same levels as in early 1998," said the marketing chief of an integrated steel producer.

The downstream cold rolled producers have, on their part, begun hecticlobbying for a roll-back of the protection given to the HRC producers as, they feel, it will encourage HRC companies to hike prices to the $302 per tonne levels.

The Cold Rolled Steel Manufacturers Association (Corsma) has said HRC producers can now hike prices upto Rs 3,000 per tonne (to the $302 per tonne levels). "This protection translates to a gain of Rs 5,088 crore per year to the HRC players," Corsma officials said.

A senior official of a HRC company refuted these charges and said: "Considering the floor price of $392 a tonne on CRC imports, the effective cushion of around $150 per tonne that the cold rollers enjoy is at par with the international norms. The proposed changes will increase HRC prices to the $245 levels, but domestic prices are still at around $220 a tonne."

"What one should realise is that whether the domestic steel industry is in any position to absorb any price increase at all, leave alone raising HRC prices to the $302 per tonne levels as the cold rollers are claiming," headded.

"All HRC players know that if the prices are increased to the $302 per tonne levels, as the CRC players are saying, the user industries are not in any position to buy HR coils at that price," the official said.

HRC is the primary intermediate product for cold rollers, galvanised and colour coated sheet manufacturers, and constitutes about 70 per cent of the total production cost.

While current international prices are ruling at around $180 to $200 per tonne c.i.f, the recent DGFT notification had determined $302 a tonne as the floor price for HRC imports, following which hikes of around Rs 1,500 per tonne have been proposed.

Any price hikes, at this stage, will be a shot in the arm for the HRC makers, who are saddled with huge debt burden - estimated at around Rs 20,000 crore - with financial institutions which has now prompted the Centre to work out bail-out packages for them.