Steel minister Ram Vilas Paswan has convened a meeting of major steel producers on Thursday to discuss the steel price issue. Paswan, who’s in UK as part of a business delegation will return on Thursday and wants to take stock of the situation to provide inputs to the government on further action.
The Cabinet Committee on Prices (CCP), which met on Monday and took a host of decisions regarding reducing import duties on certain commodities to check inflation, had deferred a decision on steel products in the absence of Paswan.
Though the government has been mulling a host of measures like abolishing import duty on steel, which currently stands at a low of 5% and levying a 10% export tax, sources said that the likelihood of the first measure being announced is high.
The country currently imports 6.5 million tonne of steel on an annual basis and according to rough estimates if the duty is abolished the same may rise to around 9 million tonne easing supply side bottlenecks.
The steel ministry-producers meeting comes at a time when the market sentiment has already started to move on the lower side. Traders said that prices of construction grade steel like ingots, TMT bars and structural steel have gone down in the last 5-6 days. While prices of ingots have gone down by Rs 3,600 per tonne, that of TMT bars have gone down by Rs 1,200-1,500 per tonne. In the last four months prices of ingots had risen by Rs 11,000 per tonne while that of TMT bars had gone up by Rs 8,000 per tonne.
Steel prices in the last four months (December-March) have risen in the international market from an average of $300 per tonne to $900 per tonne. In comparison, prices in domestic market have risen by only Rs 6,000 during the same period and currently ruling at around Rs 33,000-34,000 per tonne.
One of the major factors triggering price hike is rise in prices of key raw materials like iron ore and coking coal. Long-term deals for iron ore in February saw a rise of 65%, which means prices in the spot market have witnessed a near 100% rise. Similarly, coking coal prices have gone by more than three times since December to touch $310-320 per tonne.
The steel producers had last week told the government that they would voluntarily halt exports in their bid to check rising steel prices.
