Economy

'PMO monitoring steel prices daily'

Our Bureau New Delhi | Updated on February 25, 2021

Domestic steel prices have risen by 40 per cent, mainly in the October-January period

Prime Minister Narendra Modi’s office is monitoring steel prices on a daily basis due to concerns about their negative impact on the government’s infrastructure push, said Ranjan Bandyopadhyay, Executive Secretary, Joint Plant Committee, Ministry of Steel, on Thursday.

“PMO is monitoring steel prices every day. They have received lots of complaints,” Bandyopadhyay said at the virtual Indian Steel Markets Conference.

Domestic steel prices across product categories have risen by around 40 per cent, mainly in the October-January period. Minister for Road Transport & Highways Nitin Gadkari last month accused big players in the steel industry of cartelisation to hike prices artificially. The industry, however, argues that the sharp rise in steel prices in other countries shows that this is the work of market forces.

Domestic steel prices have fallen 6-8 per cent month-on-month in February, Bandyopadhyay said, adding that this correction is likely to continue. “Prices will definitely not sustain and come down this financial year.”

This would be due mainly to the rise in imports, following the Budget decision to reduce the import duty to 7.5 per cent across product categories such as primary or semi-finished products of non-alloy steel, long products of non-alloy, as well as stainless and alloy steel.

“If imports rise in the future, it may be difficult to retain the prices,” Bandyopadhyay said

Kicking off with a low production base in financial year 2021 due to Covid-19, the industry is expected to grow by about 9-10 per cent in the next financial year, he added.

Industry miffed

The reduction in import duty will severely hurt small manufacturers as well as the bigger players who are already financially stressed, said Vijay Sharma, Director, Jindal Stainless.

“The MSME players who make products like utensils will have to shut down and become traders,” Sharma said.

The government’s target to raise India’s crude steel production to 300 million tonnes by the financial year 2031 is unachievable, he added.

“It will take the industry at least 13 years to reach that target, so it is not mathematically possible to achieve it in 2030,” Sharma said.

Additionally, the government needs to allow the industry to remain profitable so that it can undertake capital expenditure to raise the production capacity, he added. “Profit is not a bad word,” Sharma said. “We need to have profits to make investment.”

Steel manufacturers reported favourable results for the latest ended financial quarter.

Published on February 25, 2021

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