Small and medium enterprises doubt if the latest decision by the steel producers to cut prices would bring any immediate benefit to them.
SMEs also believe that the category in which steel prices have been slashed is largely used by secondary steel manufacturers, who produce finished products like pipes and sheets. “Whether small scale industry benefits or not would depend on whether secondary steel manufacturers pass on the price cut to consumers,” said SK Narula, President of Phase I and II of the Naraina Industrial Association.
After a meeting with Prime Minister Manmohan Singh on Wednesday, steel manufacturers agreed to cut prices of flat products by Rs 4,000 per tonne and that of reinforcement bars and structurals by Rs 2,000 per tonne. They also agreed to hold the reduced prices for the next three months, but said the decision would not apply to long-term contracts that had already been signed.
“The price cut is just an eyewash,” said Naven Jain,, Secretary of the Muzaffarnagar-based Uttar Pradesh Welding Electrodes Manufacturing Association.
“They (steel companies) had already taken an undertaking from us in April according to which we will have to buy steel at a determined price up to June."
The price cut would mostly benefit the construction sector, which uses large sheets of steel, Jain said.
"It would not anyway have made any difference to us as there is no cut announced in the specialised steel that is required for manufacturing electrodes,” he said.
SMEs say they have seen prices of steel products they use rise close to 60 per cent since December. The spike in input costs had dented their competitiveness against imports from China and hurt their profitability, said Rajesh Malta, who makes suspension parts for the automobile industry.