Facing a rap on the knuckles by the government, the steel industry has decided to play sport by rolling back the prices of TMT bars, galvanised steel and hot-rolled (HR) coils.
After the government asked the steel industry to contain prices to keep inflation under check, majors, including SAIL, Rashtriya Ispat Nigam Ltd, Essar, Ispat, JSW Steel and Tata Steel, have agreed to cut prices.
Steel producers have agreed to roll back the increase in prices of various steel products announced on March 1. The roll-back is 100 per cent in the case of TMT bars and galvanized corrugated products. In HR coils, the producers agreed to reduce the price by Rs 500 per tonne.
All the steel producers had increased the prices of TMT bars by about Rs 300-700 per tonne, that of galvanized corrugated products by Rs 300-500 per tonne and that of HR coils by Rs 1,000-1,200 per tonne on March 1.
Announcing the decision, the steel secretary said the roll-back in the prices of HR coils was about 50 per cent of the recent hike.
The price hikes have been a matter of concern, and the government thought there was a need to talk to the industry, said Steel Secretary RS Pandey.
Chairman and Managing Director of SAIL SK Roongta said the move would not have any major impact on profitability.
Producers said the hike in prices on March 1 was a routine activity carried out on the first of every month and was based on domestic and international fluctuations.
Pandey also ruled out the appointment of a regulator to check steel prices in the domestic market and said as and when concern is expressed on any issue, the matter is taken up with the relevant authorities.
Cement manufacturers also increased the prices of cement by Rs 12 per 50 kg following the proposal in the Union budget to introduce a differential excise regime. Finance Minister P Chidambaram has proposed to reduced the excise duty to Rs 350 from Rs 400 per tonne on cement whose retail price is not more than Rs 190 per 50 kg bag. On cement with a higher retail price, the excise duty is Rs 600 per tonne.
Chidambaram on Monday said the government was not re-imposing price controls on the cement industry. The government owes a responsibility to moderate prices where they have risen unreasonably. A differential duty structure is not a new idea. It exists in footwear. The Tamil Nadu government had imposed a differential sales tax on cement based on retail prices. We have simply taken a leaf out of what Tamil Nadu had done a few years ago, he said.
The finance minister said the cement industry should ponder over the issue and should seek a meeting with the government to discuss the matter. Industry should cooperate in moderating inflation. Short-term profits should not cloud long-term price stability as moderate inflation is good for all.