We won’t cut prices, say steel makers
Business Standard, May 16, 2009, Page 1
Ishita Ayan Dutt / Kolkata
Raw material prices are above 2007 levels whereas finished product prices have fallen, they argue.
Domestic producers of hot rolled (HR) steel, the intermediate that is used by automobile and consumer durables manufacturers, have emphatically ruled out the possibility of dropping prices ahead of the imposition of a safeguard duty on imports.
Last week, Commerce Secretary Gopal Pillai had said HR producers needed to cut prices before the government would consider their demand for a safeguard duty against cheaper imports.
The producers, however, said there was no scope to cut because raw material costs hadn't fallen as sharply as prices of the finished product.
“We should take 2007 as the benchmark since it was a normal year, as 2008 was the year when prices peaked. If we look at 2007, then the current raw material prices are higher than 2007 prices, while finished steel prices are lower in the same period,” said an HR producer (see table).
Seshagiri Rao, joint managing director and group chief financial officer, JSW Steel, added that although production and consumption had come down, imports had not declined to the same extent.
“It’s not a question of imports, steel is being dumped in India because the demand is better here than other countries. There should be a level playing field. Corrective measures need to be taken because there are huge orders being booked for imported HR steel,” he said.
This is not the first time the government has intervened in steel pricing, because the metal is a component of the wholesale price index. In May 2008, with inflation ruling at around 8 per cent, steel makers gave Prime Minister Manmohan Singh an undertaking that prices would not be increased for three months, following successive increases and some partial rollbacks at the behest of the steel ministry.
Steel makers, however, said this time there was no direct communication from the government to reduce prices, just an oral suggestion.
The Standing Board on Safeguards, which met on May 11, had asked the Directorate General of Safeguards (DGS) to examine the issue further and seek the views of the parties concerned, including consumers.
In April, the DGS had recommended a 25 per cent safeguard duty on imported HR coils (HRC) below $600 a tonne to protect domestic industry from cheap imports.
The recommendation followed an application by Essar Steel and Ispat Industries, supported by JSW Steel and state-owned Steel Authority of India Ltd (SAIL), after international prices fell sharply.
Global HRC prices have collapsed to $410-$415 a tonne from a peak of $1,070 a tonne between July and September last year. Today, some importers are even quoting prices between $360 and $380 a tonne.
Business Standard, May 16, 2009, Page 1
Ishita Ayan Dutt / Kolkata
Raw material prices are above 2007 levels whereas finished product prices have fallen, they argue.
Domestic producers of hot rolled (HR) steel, the intermediate that is used by automobile and consumer durables manufacturers, have emphatically ruled out the possibility of dropping prices ahead of the imposition of a safeguard duty on imports.
Last week, Commerce Secretary Gopal Pillai had said HR producers needed to cut prices before the government would consider their demand for a safeguard duty against cheaper imports.
The producers, however, said there was no scope to cut because raw material costs hadn't fallen as sharply as prices of the finished product.
“We should take 2007 as the benchmark since it was a normal year, as 2008 was the year when prices peaked. If we look at 2007, then the current raw material prices are higher than 2007 prices, while finished steel prices are lower in the same period,” said an HR producer (see table).
Seshagiri Rao, joint managing director and group chief financial officer, JSW Steel, added that although production and consumption had come down, imports had not declined to the same extent.
“It’s not a question of imports, steel is being dumped in India because the demand is better here than other countries. There should be a level playing field. Corrective measures need to be taken because there are huge orders being booked for imported HR steel,” he said.
This is not the first time the government has intervened in steel pricing, because the metal is a component of the wholesale price index. In May 2008, with inflation ruling at around 8 per cent, steel makers gave Prime Minister Manmohan Singh an undertaking that prices would not be increased for three months, following successive increases and some partial rollbacks at the behest of the steel ministry.
Steel makers, however, said this time there was no direct communication from the government to reduce prices, just an oral suggestion.
The Standing Board on Safeguards, which met on May 11, had asked the Directorate General of Safeguards (DGS) to examine the issue further and seek the views of the parties concerned, including consumers.
In April, the DGS had recommended a 25 per cent safeguard duty on imported HR coils (HRC) below $600 a tonne to protect domestic industry from cheap imports.
The recommendation followed an application by Essar Steel and Ispat Industries, supported by JSW Steel and state-owned Steel Authority of India Ltd (SAIL), after international prices fell sharply.
Global HRC prices have collapsed to $410-$415 a tonne from a peak of $1,070 a tonne between July and September last year. Today, some importers are even quoting prices between $360 and $380 a tonne.
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