New Delhi, Aug. 23: SAIL, Essar, Ispat and Jindal today slashed steel prices by Rs 500-1,000 a tonne on all grades.
The Centre, which has been struggling to contain the near 8 per cent inflation rate, had threatened to scrap export incentives for the industry if it did not cut rates.
Essar, Jindal and Ispat, which rely on overseas sales heavily, decided on a reduction of Rs 500 a tonne, excluding excise. Otherwise, the actual fall is Rs 560.
Flat steel-makers claim they suffer from excess capacity of 4 million tonnes, though the figure is hotly contested by user-firms. In the absence of export sops, these companies will be forced to dump surplus in the domestic market, depressing prices further. Expensive steel and rising oil prices are considered the main culprits behind spiralling inflation.
Tata Steel was the first to announce the reductions, cutting prices by Rs 2,000 a tonne on Sunday. Today, SAIL followed through with a slash of Rs 1,000-1,500. The state-owned steel giant will not be affected if export incentives are withdrawn, but it decided to help the government rein in galloping prices.
“We have always believed in price-stability and cut down our exports to make more steel available here,” SAIL chief V. S. Jain said after announcing the cut.
The reductions are expected to hold until the next quarter, though Essar Steel managing director Prashant Ruia insisted that domestic flat steel prices were significantly lower than rates in overseas markets. His firm unveiled a reduction of Rs 560 per tonne.
As a result of today’s revisions, hot-rolled coils, the most basic variety of steel, will cost Rs 24,500-25,000 at the factory gate, before excise duty is imposed; this is a decline from around Rs 25,500 a tonne.
How much less an end-user finally pays depends on whether foundries that process steel or middle-men who sell it to customers, pass on the cuts.
On Friday, the government scrapped import duty on defective steel and on ships imported for breaking to 5 per cent. Non-alloy steel, used in construction and households, will be taxed at 5 per cent now, down from 10 per cent.
Steel prices had gone up sharply this year. The firms blamed it on the firmness in global rates but user-industries claimed it was above the foreign average.
Steel-makers like Tata Steel, SAIL, Essar, Ispat and Jindal Iron justified the hikes by citing a two-fold increase in input costs. The Indian Steel Alliance, a pressure group that represents these firms, argued the cost of coke has gone up 300 per cent and iron pellets 200 per cent. Freight charges increased a whopping 300 per cent.