Financial Daily from THE HINDU group of publications
Wednesday, Jun 02, 2004
Industry & Economy
HR steel prices may stabilise: Irani
Dr J.J. Irani, Chairman, Indian Steel Alliance, with Mr Moosa Raza, President, addressing a press conference in the Capital on Tuesday. Kamal Narang
New Delhi , June 1
PRICES of hot-rolled steel in the domestic market are expected to stabilise at current levels if international prices do not fall further.
However, if global prices continue to fall, then domestic prices too will soften further, according to the Indian Steel Alliance (ISA), which represents the five major Indian steel producers.
The ISA Chairman, Mr J.J. Irani, said that, "I don't see prices going up any further and they should remain stable at the current levels for the moment."
"But if international prices continue to soften then domestic market prices may also come down", he said but declined to specify any time frame by which domestic prices may actually come down.
Mr Irani, however, maintained that there should not be any Government interference regarding pricing of steel.
It may be noted that while international prices have started moving down during the past two months following China's administered economic slowdown, prices in India have remained unchanged due to strong demand from user industries such as the auto and consumer durables sectors.
Market sources, however, said that there is a marginal recovery in steel prices in certain world markets during the past few days.
The ISA has also urged the Government for restoration of the duty entitlement pass book (DEPB) scheme, an export incentive scheme that was suspended by the Government in March to curb exports in view of shortage in the domestic market.
The ISA President and former Steel Secretary, Mr Moosa Raza, said that the ISA has suggested the Government that in order to help the steel industry grow policy initiatives should be aimed to ensure that all integrated steel producers have their captive iron ore mines.
The ISA has also suggested that the Government should act as a facilitator for sourcing coking coal from outside the country and leverage import of coking coal with export of iron ore, which India has in plenty.
Mr Raza also said that the cost of capital for steel companies should also be linked to international rates in order to position the Indian steel industry in the global context.
Pointing out that the profitability of the steel industry is very low, Mr Irani said conditions must be such that "the steel companies are allowed to make reasonable profits."
He said that "reasonable" profit for the steel companies would be in the range of 12.5 per cent to 15 per cent of net sales. "Government allows 12.5 per cent profit for fertilisers and 15 per cent for power. For steel, the reasonable profit level should be anywhere in between," he said.
The ISA also urged the Government to maintain the customs duty at 15 per cent to ensure protection to industry from cheap imports.
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