Steel firms miffed over move to regulate prices

Cabinet has approved new steel policy: Paswan

Steel companies have reacted strongly to the minister of steel Ram Vilas Paswan's statement that the government will regulate metal prices through the new policy. "It's not possible as the new steel policy doesn't mention any measure to control prices," said an official of a steel major.

"Steel companies follow market dynamics. The government had also reduced import duty on steel from 30 per cent to 5 per cent over the last two years. So how can prices be regulated," he said.

Ispat's spokesperson said, "Prices are already at a two-year low, and has come down by 35 per cent since May 2005. Steel prices are benchmarked to international prices. The only way to bring down prices is to make Indian steel competitive price-wise. For that input prices need to be checked."

Paswan was quoted as saying that the draft of the new steel policy, aimed at regulating prices, has been approved by the Union Cabinet. The government will soon announce the new steel policy to regulate prices, which have been volatile due to domestic factors and the international price situation.

Price of iron-ore, the main raw material in steel production, have increased from Rs 816 to Rs 2,000 per tonne. Steel producers should be given captive iron-ore mines to make steel more cost-effective, the spokesperson said.

An industry insider echoed the view, saying, "Tata Steel and SAIL have their own captive mines. What about other players which have to pay for raw materials. Controlling steel prices is not possible unless you have a regulator for this."

The ministry has set a target to increase steel production from the current 38 million tonne to 110 million tonne by 2020 by investing a further Rs 1.60 lakh crore in production, Paswan said.

On the uncertainty in steel prices, Paswan said since large quantities of the 38 million tonne was being produced by private operators, it was difficult to regulate the prices.

Moreover, with steel being de-controlled by the last BJP government, international prices were also making import prices uncertainty.