Pressure from the highest echelons of a government fighting price fire seems to have been brought to bear on the steel ministry, which has asked the Steel Authority of India (SAIL) to cut long steel prices by Rs 3,000 per tonne.
“The SAIL chairman has told me that they have brought down prices of long products by Rs 3,000 per tonne in the last 4-5 days,” steel ministry secretary Atul Chaturvedi told NW18 on Monday.
“He said prices could go up again next month if the market supports.”
But a SAIL spokesperson, who did not wish to be named, gave DNA an unusual explanation: “We haven’t cut long steel prices. The Rs 3,000 per tonne correction is because we haven’t increased prices as much as others in the market did,” the person said.
The ministry had earlier asked SAIL to explain the rapid price increase of Rs 3,500 per tonne over the past two months. The ministry feared that rising steel prices may stoke inflation and had hinted that SAIL will be asked to roll back prices soon.
SK Roongta, chairman, SAIL, concurred with the ministry and said “prices will come down soon”.
SAIL’s prices of long products are now back to where they were in November 2009 — at about Rs 30,000 per tonne.
An analyst with a foreign brokerage, not wanting to be named, said: “It’s almost as if the government wants the shareholders to pay for its inability to tackle price rises elsewhere in the economy.”
Steel companies increased prices twice by 3-5% across categories in December and early January, citing rising raw material costs.
SAIL was one of them, apart from Tata Steel, JSW Steel, Essar Steel and Ispat Industries.
Industry analysts are of the opinion that steel prices have only one way to go due to rising raw material prices.
“Indian steel prices have further upside potential on the back of increased cost of production (coking coal and iron ore contracts expected to be revised northwards) and lower threat of imports due to high level of capacity utilisation in Chinese region and higher cost of production in the developed world (which has lower utilisations levels),” said Ravindra Deshpande, metals analyst with Elara Securities.
SOURCE:http://www.dnaindia.com/
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