The Hindu Business Line : `Check on rising input costs will help reduce steel prices'

THE Indian Steel Alliance (ISA), the association of primary steel producers, has said that even though the current prices of steel are the end-result of rising input costs, it is committed to the well being of the small-scale industries (SSIs) and will ensure that the required quantities of flat products are made available to them.

In a statement here on Monday, the ISA President, Mr Moosa Raza, while commenting on the thorny issue said: "We understand the concerns of SSIs and are ensuring adequate supplies of flat products to them. At the same time, SSIs must appreciate the fact that rise in steel prices is an inevitable fall-out of increasing input costs to the producers."

Explaining the predicament of the primary producers, Mr Raza said that the average input cost for the steel industry had climbed by over 300 per cent. Giving the break-up of the incidence of hike in input costs, he said that while the international price of coke had gone up by over 280 per cent from $120 per tonne in December 2002 to $465 per tonne in February this year, the price of iron ore had also appreciated by more than 300 per cent, from $28 per tonne to $120 per tonne during the same period. Similarly, freight charges have also gone up by over 400 per cent.

Despite all these difficulties by way of input cost hikes, the ISA member-companies have already reduced steel prices by Rs 1,500 - Rs 2,000 per tonne after absorbing a major portion of the increase in input costs. The recent cut in excise duty on steel products from 16 per cent to eight per cent — amounting to about Rs 2,000 per tonne — has also been passed on in full to the customers.

In addition to this, ISA has promised to hold the current prices till June this year and review them on a quarterly basis. "These steps have been taken in the interest of all users, including SSIs, and are expected to benefit customers across all segments," Mr Raza said.

All these apart, the alliance, after consultations with the Government and user groups, has already announced that it will meet the entire domestic demand of hot-rolled (HR) coils and that there would be no export of HR coils at the cost of the local market.

As for the small consumers, ISA has decided to meet the aggregated demand for HR coils, subject to the minimum quantity depending upon the members.