Steel firms agree to cut prices

Domestic steel producers, including Tata Steel and Rashtriya Ispat Nigam Ltd, have told the government they will cut prices by Rs 2,000 a tonne on long products like TMT bars used in construction while most producers agreed to roll back prices of roofing materials like galvanised corrugated sheets by Rs 500 to Rs 1,000 a tonne.

This is the second price cut by steel companies at the government's behest in the calendar year. In February, companies agreed to a cut of Rs 1,500 to Rs 2,000 a tonne but raised prices by Rs 2,000 to Rs 2,500 a tonne in March.

"This is a voluntary measure but there is no assurance to increase, decrease or hold prices beyond this," said R S Pandey, steel secretary, after a meeting with major steel companies.

The industry's assurance comes within a week after the inflation rate touched a 13-month high of 6.68 per cent for the week ended March 15. Steel (including iron) has a weight of 3.64 per cent weight in the wholesale price index.

No price change, however, has been offered in hot rolled coils (HRC), an intermediate product.

Producers also agreed to increase the allocation of products required by small and medium businesses to 600,000 tonnes from 490,000 tonnes, Pandey said.

Small users will also receive a freight subsidy of Rs 400 a tonne, which the steel companies will bear.

Companies that export high-end steel products after processing HRC have agreed to buy the entire requirement internationally under the advance licence scheme that allows duty-free imports against exports. This may boost domestic availability by 2 million tonnes annually, he added.

The industry has also assured a price transparency by displaying prices changes on their websites.