Indian steel majors not to hike domestic prices to help curb inflation
Indian government has succeeded in extracting an assurance from the domestic steel makers to hold the domestic steel price line during April 2007 to it help contain inflation which slipped to 6.39% for the week ended March 24th 2007 after hovering at 6.46% for previous 3 consecutive weeks as against comfortable levels of 5% to 5.5%. The assurance by the steel industry came amid reports that the Indian steel makers were planning to increase prices by INR 1500 to INR 2000 per tonne for April shipments due to rise in input costs and surge in International prices.
An Indian Steel Alliance delegation, which comprises of steel majors Steel Authority of India Limited, Rashtriya Ispat Nigam Limited, Jindal Steel & Power Limited and JSW Steel, Ispat Industries Limited and Essar Steel and accounts for almost 60% of Indian steel sector, met Mr P Chidambaram Indian finance minister. The delegation assured Mr Chidambaram that the steel industry will hold the prices for this month despite higher input costs and pressure on margins.
Mr Sajjan Jindal later told reporters that "It is not the finance minister alone who should be worried about inflation. Steel is the big item in the wholesale prices-based inflation. We have to support the government to fight inflation. We will not increase the prices for the month of April, but will review the situation next month." Mr Jindal added that input prices of steel like railway freight and finances have gone up lately and the industry's decision to hold the price line would strain its profitability but prices would not be increased for this month to help the government tame rising inflation.
Mr RS Pandey secretary steel said that “They are aware of the concerns. If inflation continues to rise, demand will slacken and growth will also slacken, which will impact the industry. The industry understands this.”
However the delegation of steel makers stressed that the export duty on iron ore at INR 300 a tonne, as announced in the budget for 2007-8, should stay as it is a critical input for the sector.
Incidentally, the last price hike announce by the Indian steel majors in March 2007 beginning was also rolled back on the request of Indian government to curb inflation.
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