Price cut only if duty is halved: ISA

Steel body asks government to slash excise on alloy to 6 per cent.

The battle over rising steel prices today took a new turn with steel makers saying they would reduce prices provided the excise duty on the alloy was brought down to a reasonable level.

DUTY DILEMMA

Steel prices in the domestic market have risen 25% during the last three months on account of zooming prices of inputs such as iron ore and coke

ISA, which is an umbrella organisation of major steel producers, recently wrote to Prime Minister Manmohan Singh, opposing Steel Minister Ram Vilas Paswan's suggestion of setting up a regulator

"We are also sensitive to the pricing issue. If the government lowers excise duty on the alloy to about 6 per cent from 12 per cent, we will duly pass the benefit it consumers," Indian Steel Alliance President (ISA) Moosa Raza said.

ISA, which is an umbrella organisation of major steel producers, recently wrote to Prime Minister Manmohan Singh, opposing Steel Minister Ram Vilas Paswan's suggestion of setting up a regulator for the sector which, among other things, would routinely monitor steel prices.

"We are even open to the government mandating us to reduce prices in the eventuality of excise duty being reduced. But the government will also have to simultaneously address the issue of rising iron ore prices and allocating captive ore mines to steel producers," Raza pointed out.

He pointed out that prices have been increasing due to the unprecedented rise in input costs and cited that prices of iron ore have risen by 2.5 per cent to about Rs 13,000 a tonne, coking coal by 3.2 times, natural gas by 3 times and that of thermal coal by as many times since April 2007.

"The government will have to contain exports of iron ore, which are projected at 105 million tonnes this year, up by 13 per cent, as compared with last year. We are not seeking an outright ban on exports but suggesting that exports be regulated in tandem with the growth of the domestic steel industry," Raza said.

Meanwhile, ISA today put out an advertisement in leading dailies justifying the recent hike in steel prices, wherein it contended that Indian steel industry was linked to pricing trends prevailing in global utilities and domestic producers could not remain oblivious to it.

"While steel manufacturers share the government's concern about the current price situation, any attempt to regulate market forces (regarding pricing) disregarding root causes would be a retrograde step and adversely affect growth of the industry," Raza said in his letter to the PM.

"Even state-owned NMDC raised contract prices by 50 per cent in mid 2007. Coke from China has hit the ceiling at a price of $523 a tonne."

The government would also have to address the bottlenecks in fructifying the mega expansion programs of domestic steel companies, streamline the system of securing clearances from various state-run organisations and improve infrastructure as part of long-term measures to contain rising steel prices, the ISA chief added.