Nominal price hike is expected

Steel Chamber of India President says govt willing to consider 5% rise.

The government is willing to consider a nominal price hike of maximum 5 per cent from the 15 per cent sought by the public and private steel plants, Steel Chamber of India President Sampat Totla said today.

"Public and private plants have sought higher hikes to meet, as they claimed, 15 per cent rise in production cost. Final decision on this will be taken after the annual meeting between traders and consumer council of steel ministry in May," he said.

"We and other steel associations have been asked by steel ministry to prepare steel trade's wishlist, particularly related to pricing. It will be whetted in May meeting, date of which is not fixed yet." Totla said the demand charter of Steel Chamber of India, representing both steel trade and industry at national level, will be prepared today.

He said demand for most of steel products is expected to be strong in coming months due to overall growth of Indian economy, export manufacture and ever-increasing building construction activities with government projects alone consuming about 80 per cent of domestic steel.

"Even seasonal demand growth will be there. For instance, in monsoon demand for corrugated steel roofs always rises. When demand for steel used in external fabrication reduces in monsoon, the same indoor manufacture jobs rise."

"Apart from possible price hikes by plants, also expectedly higher demand in coming months may push up steel prices by 5-7 per cent," he said.

He said the steel market and industry is one of the few sectors that are totally demand-driven and free from any sort of politics. He pointed out that though production capacities of public and private sector plants are excellent, they cannot raise prices as and when they like. "It is so because only consumption-based demand for steel decides prices."

"Today, steel re-rolling industry is doing quite well, particularly in the south because consumers are attracted by quality and prices of re-rolled steel." The re-rolling industry could fare better if the state governments encouraged them by way of tax benefits and other incentives. Why small and medium plants cannot exploit markets fully? Totla said, "Such plants depend primarily on traders who like to promote them. However, they cannot compete with big plants like Tata or SAIL due to constraints faced by them.