Soaring steel prices: Road Ministry takes steps to widen steel supplier base

New Delhi | Updated on February 14, 2021 Published on February 14, 2021

The Ministry of Road Transport and Highways has issued orders that all types of steel can be used for National Highway construction if they pass the requisite quality tests. This has been done with an aim to increase the steel supplier base and potentially lower the input cost of raw materials in the backdrop of increasing steel prices.

Earlier, the contract provisions required use of steel produced by primary/integrated steel producers only, according to official sources.

In an official release, the Ministry said all types of steel — whether produced from ore, billets, pellets or melting of scrap — will be allowed to be used for National Highway construction, as long as it meets the standards required for specific grades of steel.

The steel proposed to be used would be tested in NABL (National Accreditation Board for Testing and Calibration Laboratories) accredited laboratories as a third-party check before approval. The move is based on  analysis and discussions with stakeholders and also technical opinion.

With this step, the supplier base for steel used in the construction of national highways would increase, leading to more competition and better price discovery. Roughly, 250-300 kg or more of steel is used in building one km of national highways, an official told BusinessLine. The quantity of use can increase and vary if the highways have more structures while being built.

In view of the increase in steel prices, which can impact the cost of building national highways, Union Minister for Road Transport & Highways Nitin Gadkari had suggested the need to re-look at all conditions that  could be restrictive, without impacting the quality of material used for highway construction.

Gadkari had already raised the issue earlier in several forums, after several steel user sectors approached the Minister on this matter. The Minister had also raised the issue with Prime Minister Narendra Modi.

The Competition Commission of India (CCI) is investigating suo motu if steel companies colluded with each other to increase the price of the commodity.

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Published on February 14, 2021
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