India's steel ministry has summoned steel producers to a meeting on Thursday to discuss measures to control steel product prices, which have risen despite pledges to boost supplies, an industry source said.
The government would verify whether steel firms had maintained prices in line with a guarantee given in May, and increased supplies to the local market, the officials said.
“We have not increased prices and we will submit the data to the government,” an executive with a steel firm, who did not wish to be named, said. “Exports have actually gone down.”
Indian steel firms said they would hold prices for 3 months to help the government fight rising inflation, and companies including state-run Steel Authority of India (SAIL) and Tata Steel then cut prices by 5-10 per cent.
However, average retail prices of hot-rolled coils have increased by about 9 per cent since mid-May, according to data collected by the Joint Plant Committee (JPC), an official body headed by a senior official of the steel ministry.
On Tuesday, SAIL said in a statement traders, and other intermediaries were passing on higher input costs to customers, while some analysts said small steel firms were doing the same.
“There was no commitment from the smaller producers, who raised prices since they faced higher input costs,” Vishal Maniyar, an analyst with Karvy Comtrade said. Small firms account for about 40 per cent of the country's steel production. The average price of hot-rolled coils, an intermediate product, rose to Rs 47,331.25 ($1,094) a tonne in mid-June from Rs 43,458.33 a month ago, JPC data showed.
Provisional data from the JPC showed, steel consumption rose by 10.7 per cent in 2007/08, while production growth was lower at 5.1 per cent. The gap was met through 7.18 million tonnes of imports.
Steel firms have promised to reduce exports and divert supplies to the local market. SAIL said earlier in June it had increased the supply of steel to the local market by about 32 per cent.