Regulator splits steel industry

Cracks have surfaced in the apex alliance of steel producers. The top five members of the Indian Steel Alliance (ISA) "" Steel Authority of India, Tata Steel, Jindal Vijaynagar, Essar Steel and Ispat Industries "" are at odds on two major issues.

While all have protested against Union Steel Minister Ram Vilas Paswan's idea of a regulator for the steel sector, SAIL is willing to accept a regulator if steel prices become unreasonable.

"When the prices become unreasonable, then the (role of a) regulator will become reasonable," SAIL Chairman VS Jain said.

He is, however, unwilling to accept a regulator that does not cover the entire industry.

Even during pre-1991 control-raj, only SAIL and Tata Steel were under the scanner and not the secondary steel producers, Jain pointed out. "Why should only I show my cards?" he asked.

Players in the private sector do not agree. "We do not need a regulator in a particular product where there is no entry barrier and virtually no restriction over import. At present the import duty on steel is a mere 5 per cent. Domestic price of steel, therefore, must move in concert with the global trend. What will the regulator regulate? Can it regulate the global price? More important, do we have regulator for any other free market commodity like cement?" an Essar Steel spokesperson said.

Says ISA Chairman Moosa Raza: "The draft National Steel Policy does not talk about a regulator. On the pricing front, the policy clearly states that there are 3,000 units manufacturing steel in country and over 100,000 traders in steel. How can a regulator ever control prices under these circumstances?"

The second issue that has caused heartburn among steel producers is the ministry's proposal to supply iron ore to public-sector companies at a lower price as they meet national social objectives.

Although the National Mineral Development Council is yet to take a call on the government's proposal, both Essar Steel and Ispat Industries have opposed it on the grounds that they already pay international prices for iron ore to NDMC.

The proposal will not impact SAIL and Tata Steel as their requirements are met by captive iron ore mines.

"This discriminates against those who do not have their own captive mines," an industry source pointed out.

It is also worth noting that when Tata Steel dropped hot-rolled coil prices by Rs 2,000 per tonne in August, others had dropped prices by a lesser extent and had said that Tata Steel was in a better position to cut prices because of its captive mines.

Clearly, the old unity is a thing of the past.