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Domestic steel companies may extend volume discounts on steel used as intermediates by small-scale manufacturers, with turnover up to ₹100 crore, and to exporters, for their production activities, a source tracking the matter has said.
“Steel manufacturers are considering the demand for a volume discount of about ₹3,000 per tonne to Micro, Small, and Medium Enterprise (MSME) units with turnover up to ₹100 crore, and to exporters, on steel sourced as inputs, which could be extended on a quarterly basis. A final decision on the matter will be taken soon,” the source told BusinessLine .
The development follows a meeting between the Minister of Commerce and Industry, Piyush Goyal, and top representatives of steel companies such as Steel Authority of India Limited (SAIL), Rashtriya Ispat Nigam, JSW Steel, and Tata Steel last week. Steel Minister Ram Chandra Prasad Singh and Minister of MSME Narayan Tatu Rane also participated along with the user industry.
Relief to small players
Goyal asked them to consider offering some relief to small industries and exporters using steel as an input for manufacturing of components and other engineering products as their production and exports had taken a hit due to rising prices of the primary input in the domestic market.
“While steel producers seem ready to offer some concession, they want it to be confined to only manufacturing units and be strictly commensurate with their manufacturing capacities,” the source said.
To enable proper identification of units that are to be supplied steel at a discount, discussions are on for setting up a portal where steel users will fill in their details and state the quantities they require.
“Their demand would be vetted and certified by industry associations to ensure that quantities sourced at discounted prices are not higher than what is required by a unit,” the source explained.
Rising prices
Steel prices have almost doubled over the last year causing distress to MSMEs and exporters manufacturing a wide range of items that require steel as inputs. Steel makers justify the price rise by arguing that the sharp increase in fuel prices, especially that of Australian premium coking-coal, necessitated the increase. In December, the price of hot-rolled coil is in the range of ₹67,000-70,000 a tonne, per industry estimates.
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