The Hindu Business Line : Steel prices to be rolled back

THE Union Government has reached an understanding with the Indian Steel Alliance (ISA), the representative body of the major primary steel producers, on a rollback in prices by about Rs 4,000 a tonne.

The compromise solution, coming a day after the producers had increased the prices of hot-rolled (HR) steel to Rs 27,000 a tonne, was thrashed out at a high-level meeting between the Steel Ministry and an ISA delegation under the chairmanship of the Minister of Steel, Mr Braja Kishore Tripathy.

The ISA delegation comprised the Chairman of Steel Authority of India Ltd (SAIL), Mr V.S. Jain, the Chairman of Essar Steel, Mr Sashi Ruia, the Tata Steel Joint Managing Director, Dr T. Mukherjee, the Chairman of Jindal Vijaynagar Steel, Mr Sajjan Jindal, and the Ispat Industries Managing Director, Mr Vinod Mittal.

According to sources in the manufacturing companies, there will be an effective reduction of Rs 4,000 in the prices of HR steel products from the existing Rs 27,000 a tonne. Out of the effective decrease of Rs 4,000, a reduction of Rs 2,000 will be in the form of price cut by the steel- makers while another cut of Rs 2,000 will be in the form of the recent eight per cent reduction in excise duty which will be fully passed on to the consumers. Thus, the final price works out to around Rs 23,000 a tonne.

According to Government sources, however, the ex-plant price will be pegged at about Rs 22,000 a tonne. On this, the effective eight per cent excise duty and sales tax are to be added and this will take the sale price to about Rs 23,000 a tonne.

Last week, the Government and the steel producers had reached an understanding on freezing the prices of HR coil at Rs 27,000 till June this year. However, owing to the ambiguity in the mutual agreement, certain steel manufacturers who were selling at a lower rate of Rs 22,000-24,000, raised their prices to the agreed ceiling of Rs 27,000 a tonne.

The move turned out to be extremely embarrassing for the Government, following which today's meeting was convened on an emergency basis.