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Wednesday, Nov 10, 2004

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Another steel price hike on cards

Ambarish Mukherjee

New Delhi , Nov. 9

ANOTHER round of hike in steel prices seems to be in the offing, with the Government trying to wash its hands off the pricing issue.

For, essentially, it is the "push and pull" factors between the primary producers and the secondary manufacturers that effectively determine steel prices in the domestic market.

According to official sources, at a meeting between the Cold Rolled Steel Manufacturers' Association (Corsma) and the primary producers convened by the Ministry of Steel here on Monday, the Government made its stand clear, noting that pricing was a "bilateral issue" and the Government had nothing to do with it.

Major primary producers had announced a price cut during the last week of August at the behest of Government to check inflationary pressures.

However, the primary producers, as of now, are a divided lot. The largest private sector steel maker Tata Steel has quit the Indian Steel Alliance. Steel Authority of India Ltd, being a public sector unit, is always a passive player in sensitive issues such as pricing. So, it is the other three primary steel makers, namely, Jindal Vijaynagar, Essar Steel and Ispat Industries - whose representatives were present at the meeting - are more concerned with the pricing issue.

Corsma had sought Government intervention stating that even after announcement of price cuts some of these companies actually increased their prices. The companies, however, refuted the claims. Following the divergent stands taken by the producing and consuming industries, the Ministry stated that it would not intervene in fixing prices and that the issue is to be decided between the seller and the buyers.

Following this development on Monday, representatives from the steel manufacturing companies said that since the contract with some big users are soon coming to an end, there was a strong possibility that prices for new supplies would be contracted at market-related rates, especially when the cost of energy is also set to increase.

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