The industry also reiterated its April 22 commitment to hold prices for the next three months.
The decision to cut prices, the third and the steepest this year, followed a meeting with Prime Minister Manmohan Singh, Finance Minister P Chidambaram and Steel Minister Ram Vilas Paswan.
Representatives of leading producers like Steel Authority of India (SAIL), Tata Steel, JSW, Essar, Ispat and Jindal Steel & Power attended the meeting.
The rise in steel prices has been a major factor in the recent spurt in the inflation rate, which crossed 7 per cent last month.
Flat product prices have risen 17 to 24 per cent in the last one year and long products like bars and rounds have jumped 50 to 60 per cent in the same period. Chidambaram recently accused the industry of forming a cartel to keep prices high.
Steel along with iron has a weight of 3.64 per cent in the wholesale price index (WPI).
The industry, however, also raised some issues with the government such as scrapping the recently imposed 15 per cent export duty and measures to curb rising raw material prices.
"We have suggested an ad valorem export duty of 15 to 25 per cent on iron ore exports to ensure its availability for domestic producers. Companies like NMDC and Coal India Ltd should also reduce prices for the steel industry," B Muthuraman, managing director, Tata Steel, told reporters after the meeting.
The industry demanded the allocation or renewal of iron ore and coal mines on a priority basis. It also suggested setting up an empowered committee to facilitate legal, environmental and forestry clearance for new projects.
However, there has been no specific assurance from the prime minister on any of these proposals, said S K Roongta, chairman of government-owned SAIL.
Other suggestions included a reduction in excise duty from the current 14 per cent and maintaining the railway freight on steel-making raw materials and on steel products at the current levels.
THE PRICE OF INFLATION
February 14: Producers agree to cut prices Rs 500-1,000 a tonne
March 1: Price rise of Rs 2,000-2,500 a tonne
April 3: Agree to cut prices by Rs 500-2,000 a tonne
April 9: Raise prices by Rs 5,000 a tonne
April 22: Assurance to PM to hold prices for 2-3 months
May 7: Price cut of Rs 2,000-4,000 a tonne
